Bitcoin is soaring, but the Bitcoin network has become an on-chain ghost town?

Discuss investor activity in on-chain and off-chain markets and analyze changes in the current cycle through network indicators. This article is sourced from UkuriaOC, CryptoVizArt, Glassnode, and is compiled, compiled and contributed by AididiaoJP, Foresight News. (Synopsis: Peter Schiff "I understand bitcoin so I don't hold it": I can't understand the US bond stablecoin, which is not as good as gold reserves in the US dollar) (Background supplement: Taiwan's financial regulatory commission approved "bitcoin custody", KGI, CITIC, and federal 3 banks preemptively trialed) The number of on-chain transactions declined, but the settlement volume increased, indicating an increase in the use of large entities. While the number of transactions decreased, the average transaction size increased significantly, indicating that institutional or high-net-worth participants are dominating on-chain activity. Despite Bitcoin trading prices near all-time highs, on-chain fees remain low and demand for block space remains minimal. This is a significant departure from previous cycles. In previous cycles, price increases have often been accompanied by spikes in fees due to congestion and rising network usage. Trading activity is increasingly moving off-chain, with centralized exchanges now accounting for the majority of trading volume, and even more so in the futures market. It's worth noting that the total trading volume of spot, futures, and options is typically 7 to 16 times higher than the on-chain settlement volume. Leverage continues to accumulate, with total open interest in futures and options reaching $96.2 billion. The collateral structure has improved significantly, and stablecoin margin positions now account for the majority of open interest. On-chain ghost town Bitcoin is currently holding above the important psychological threshold of $100,000, just 6% away from its all-time high of $111,700. One might expect on-chain activity on the Bitcoin network to be equally active, but there is a clear divergence: spot prices remain high, while network activity is unusually quiet. To assess this disconnect, we first analyzed the number of transactions settled daily by the Bitcoin network. Between 2023 and 2024, the number of transactions showed a structural upward trend, peaking at 734,000 per day. Since the beginning of 2025, throughput has dropped significantly, with the number of daily transactions between 320,000 and 500,000, a significant contraction compared to the highs earlier in the cycle. To better understand the nature of Bitcoin network activity, we can divide transactions into two categories: token trading, which involves the transfer of value. Non-token transactions, such as those related to inscriptions and runes, are embedded with arbitrary data via the Taproot witness data and OP_RETURN fields, respectively. Over the past year, the number of token transactions has remained relatively stable, indicating a stable base of value transfer activity. Non-token trading, on the other hand, shows a more volatile pattern. Between July and December 2024, there was a surge in demand for non-token trading, significantly increasing the total volume of transactions. However, non-large transaction activity has declined significantly since the beginning of 2025, seriously contributing to the recent contraction in overall network throughput. Trading volume remains strong Despite a contraction in the number of transactions, the economics settled by the Bitcoin network remain at an all-time high, averaging $7.5 billion per day settlements and peaking at $16 billion during the historical price breakout of $100,000 last November. The current average transaction value per transaction is $36,200, which shows that while the volume has decreased, the value per transaction is still huge. This trend suggests that larger entities continue to use the Bitcoin network, with throughput per transaction rising even as overall transaction volumes decline. To test the hypothesis that large entities are increasingly using the Bitcoin network for value transfer, we can analyze settlement volumes by transaction size. Transactions over $100,000 show a clear structural dominance, accounting for 66% of online transaction volume in November 2022 and has now risen to 89%. This trend reinforces the view that high-value players are increasingly dominant in on-chain activities. Conversely, trading volumes of $100,000 or less experienced significant contraction over the same period. After peaking at a relative dominance of 34% in December 2022, this group's share of total transfers has declined structurally and is now only 11%. A more granular breakdown of the individual subgroups shows that the trend is consistent overall, with each group seeing a significant decline in network capacity share. $0-$1000: 3.9% to 0.9% $1000-$10,000: 8.4% to 2.1% $10,000 to $100,000: 21.4% to 7.9% On-chain fees are at an all-time low Bitcoin transaction fees have been affected by technological upgrades and shifts in usage patterns over the years. The introduction of SegWit reduced the actual size of the transaction, providing fee discounts; Centralized exchange batch processing has become industry standard practice, further improving efficiency by combining multiple withdrawals into a single transaction. Recently, inscriptions and runes embedding arbitrary data into the blockchain (Inscriptions and Runes) have caused periodic spikes in fees, often causing network congestion. Historically, on-chain fees have been a reliable indicator of network demand, and fee pressures rise sharply when block space is small relative to overall transaction demand. In a high-pressure environment, limited block space forces users to compete for the packaging and ordering of transactions, and the fee itself acts as a pressure relief valve. Therefore, rising fees usually indicate an increase in demand for block space, indicating an increase in user activity activity and speculative interest. Over the past few months, however, miners' transaction fee income has plummeted, averaging just $558,000 per day last month. This depressed fee pressure indicates a significant drop in block space demand, which signals a similar signal to an overall decrease in transaction volume. The fee income multiple (FRM) refers to the ratio of the total miner reward (block subsidy and transaction fee) to the total fee. This ratio helps to understand the composition and percentage of miners' income. This ratio tends to decline during previous bull markets, and often during the formation of all-time highs, and fee pressures surge as network activity increases and demand for trade inclusion increases. However, the current cycle presents a rather unique market structure, and although Bitcoin is trading slightly below its all-time high, the FRM ratio remains unusually high. This discrepancy highlights the relatively low fee pressure at the moment, indicating that on-chain activity is surprisingly calm, especially in a market where prices are trading near all-time highs. The Bitcoin economy consists of two parts, on-chain and off-chain, each of which plays a vital role in the dynamics of the asset's market. As Bitcoin's consensus continues to grow and the range of available financial instruments expands, centralized exchanges are increasingly influential. These platforms facilitate most trading activity and become a key venue for price discovery. Therefore, evaluating an exchange's off-chain activity is essential to building a holistic view of the Bitcoin ecosystem's activity. Starting with the spot market, trading activity on centralized exchanges has remained strong over the past year, averaging $10 billion per day and peaking at $23 billion in November 2024. It's worth noting that spot volumes of this magnitude are typically comparable to daily on-chain settlement volumes, highlighting the parallel scale of activity between the spot market and the underlying layer network. In the derivatives market, perpetual...