The relationship between price action, on-chain activity, and supply behavior in the cryptocurrency markets has entered a phase of notable divergence—echoing early-stage bull market structures. As Bitcoin stabilizes following a strong rally from late July, key on-chain metrics reveal a market defined more by conviction than congestion. Despite moderate price movements between $46,465 and $50,461 this week, deeper trends in supply maturity, investor holding patterns, and network utilization suggest underlying strength.
This report explores the evolving on-chain landscape for both Bitcoin and Ethereum, highlighting how declining transaction activity coexists with increasingly bullish supply dynamics—pointing to a maturing accumulation phase.
Understanding Market Structure After the Rally
After a powerful upward move throughout August, Bitcoin has entered a consolidation phase near the $50,000 mark. While price momentum has paused, the on-chain footprint reveals a resilient base of long-term holders. A critical factor in assessing current market health is the distribution of supply across different price bands—revealing where investor cost bases lie and where support or resistance may emerge.
Three major realized price bands have formed since breaking past the previous cycle’s $20,000 all-time high:
- $31,000–$40,000 (Floor Zone): Over 2.98 million BTC were accumulated here during early 2021 and a prolonged 2.5-month consolidation. This zone now acts as a formidable structural support.
- $45,000–$50,000 (Current Range): Approximately 1.65 million BTC have been acquired within this range. With price hovering at the upper end, this band could serve as strong intermediate support.
- $53,000–$59,000 (Trillion-Dollar Zone): Around 2.28 million BTC were bought during the March–May bull run and remain unspent—representing unrealized losses. While this zone could act as resistance if selling pressure increases, its persistence highlights strong holder conviction even after a 50%+ correction.
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This distribution underscores a growing base of investors unwilling to sell despite volatility—a hallmark of healthy bull markets.
Another telling metric is the Adjusted Spent Output Profit Ratio (aSOPR), which measures whether coins being moved are in profit. Sustained aSOPR values above 1.0 indicate profitable spending, yet continued price stability suggests the market can absorb this supply without collapsing.
Historically, this pattern follows three stages:
- Capitulation – widespread loss realization during panic selling.
- Profit-Taking with Resilience – rising aSOPR shows profits are being taken, but prices hold.
- Renewed Buyer Confidence – repeated resets near breakeven (1.0) followed by upward rebounds signal that holders are less eager to sell, while new buyers step in.
Currently, Bitcoin exhibits signs of stage three—suggesting growing confidence and structural strength beneath the surface.
On-Chain Activity Divergence: Quiet Networks, Strong Hands
Despite rising prices, on-chain activity for both Bitcoin and Ethereum remains subdued—highlighting a significant divergence between price and network usage.
Bitcoin: Declining Activity, Rising Conviction
- Active Entities: Currently around 275,000 per day, down ~21.4% from January peaks.
- Transaction Count: ~200,000 daily transactions—37.5% below peak levels.
- On-Chain Transaction Volume (Economically Meaningful): Down 62.5% from April highs, averaging $6 billion per day after entity adjustment (filtering internal transfers).
This reduced activity reflects stronger holding behavior rather than weakening interest. Fewer transactions mean fewer coins are moving—indicating that investors are less reactive to price swings.
Transaction fees have also plummeted, averaging just 21 BTC per day—only 1–2% of total block rewards. This is the lowest fee environment in two years, signaling minimal competition for block space and low short-term speculative pressure.
Ethereum: Activity Shifts Toward NFTs
Ethereum shows a similar drop in general activity:
- Active Addresses: ~450,000 per day, down 33% from May highs.
- Transaction Count: Also down ~33%, averaging 450,000 daily.
However, transaction fees tell a different story—hovering around 10,000 ETH per day, a level comparable to the DeFi summer of 2021. This surge is largely driven by NFT trading and smart contract interactions, reflecting shifting user focus within the ecosystem.
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Meanwhile, DeFi blue-chip tokens like AAVE, COMP, UNI, and YFI show declining on-chain engagement—both in active addresses and transaction volume—suggesting capital rotation toward NFTs and other emerging sectors.
Bullish Supply Dynamics: The Rise of Dormant Supply
While on-chain activity declines, supply maturity metrics paint a highly constructive picture for both networks.
Coin Age and Holding Behavior
- Young Bitcoin (<3 months old): Only 15% of total supply—near historic lows.
- Bitcoin in Mid-to-Long-Term Holdings (3 months to 3 years): Nearly 50% of supply.
- Ethereum Dormancy: Over 70% of ETH supply has been inactive for at least 3 months.
These figures indicate a massive shift toward long-term holding. Coins are aging rapidly, reducing liquid supply and increasing scarcity—a classic sign of accumulation ahead of potential price expansion.
The HODL Waves metric visually confirms this trend for both assets, showing younger cohorts shrinking while older cohorts expand steadily since March 2021.
Network Liveliness Confirms Accumulation
The Liveliness metric tracks how frequently coins are spent relative to total supply:
- Declining Liveliness = Accumulation
- Rising Liveliness = Distribution/Selling
Bitcoin’s liveliness has re-entered a sharp downtrend during this price rebound—confirming that fewer coins are being spent despite higher prices. Ethereum shows a similar trajectory post-May sell-off, even amid high NFT-driven transaction volume.
This means that while ETH changes hands frequently in NFT trades, the underlying asset (ETH itself) is increasingly held long-term by investors.
Network Adoption Continues Upward
Another bullish signal is the steady growth in non-zero addresses:
- Bitcoin: Over 38 million addresses—approaching all-time highs.
- Ethereum: Reached a record 60.7 million non-zero addresses.
This growth reflects ongoing adoption and wallet creation—showing that new users continue entering the ecosystem even during consolidation phases.
Frequently Asked Questions (FAQ)
Q: What does low on-chain activity mean for Bitcoin’s price outlook?
A: Low activity amid rising prices suggests fewer holders are selling—indicating strong conviction. This scarcity of liquid supply can fuel future upward momentum when demand increases.
Q: Why are Ethereum fees high even though activity is down?
A: Fees are elevated due to intense NFT market activity and smart contract interactions. While general user activity has cooled, niche sectors like NFTs are driving significant gas demand.
Q: Is declining transaction volume bearish?
A: Not necessarily. In bull markets, declining volume often signals accumulation rather than disinterest. When long-term holders stop moving coins, it reduces sell pressure and strengthens support.
Q: How reliable are supply maturity metrics?
A: Metrics like HODL Waves and Liveliness have historically correlated with major market turning points. A surge in dormant supply often precedes strong price rallies.
Q: Could DeFi lose relevance to NFTs?
A: While NFTs are capturing attention now, DeFi remains foundational. Capital rotation is natural—many NFT platforms are built on DeFi infrastructure, suggesting interdependence rather than replacement.
Final Thoughts: Building the Foundation for the Next Phase
The current divergence between price and on-chain activity mirrors patterns seen in early bull markets. While transaction volumes and active addresses remain below peak levels, supply concentration and holder conviction are rising sharply.
Key core keywords shaping this analysis include:
Bitcoin, Ethereum, on-chain analysis, supply dynamics, HODL Waves, liveliness, NFTs, and blockchain adoption.
These metrics collectively suggest that the market is undergoing a quiet but powerful transformation—one defined not by hype or speculation, but by accumulation and resilience.
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As dormant supply grows and new users join the networks, the foundation is being laid for the next phase of growth. Watch for any reversal in long-term holding trends—a surge in old coin movement would be an early warning sign. Until then, the data points to strength beneath the surface.