Coindesk

One bitcoin (BTC) holder metric is pointing to price growth in the months ahead even as activity on the blockchain falls to its lowest in a year, a CryptoQuant analysis noted this week.

The firm’s Bitcoin Network Activity Index has been down 15% since November 2024’s record high and stands at 3,760 as of Friday morning, its lowest level since February 2024. The index is a cumulative measure of active addresses, number of transactions, block size and fees among other bitcoin metrics to indicate growth or a drop in Bitcoin usage.

A drop in activity was marked by a sharp decline in the number of transactions. The total daily number of transactions is 346,000 as of Friday, down 53% from a high of 734,000.

Low network activity is also evident in the Bitcoin mempool, or a collection of all unconfirmed Bitcoin transactions waiting to be included in a block by miners. Mempool volumes plummeted from a high of 287,000 in December to just 3,000 as of Thursday, a slide of nearly 99% to levels not seen since March 2022.

CryptoQuant said lower use of Runes Protocol, a relatively new way to issue fungible tokens directly on Bitcoin, may be behind the plunge.

“The decline in Bitcoin’s network activity can be mostly explained by the collapse in the use of the RUNES protocol to mint tokens on the Bitcoin network,” it said. “This is evident in the total daily number of OP RETURN codes in Bitcoin transactions, which the RUNES protocol uses to write data about token mints and transfers on the network.

“When the RUNES protocol emerged in April 2024, the daily number of OP RETURN codes spiked to 802K. However, the number of OP RETURN code has plummeted since, with only 10K OP RETURN codes used,” the firm added.

However, the drop in activity may not directly affect bitcoin prices, which are seen as likely to grow because demand from long-term accumulator addresses has increased in recent weeks.

Such a spike is historically associated with a rally in the BTC price and signals the overall perception of the asset as an investment asset, or store of value. Permanent holders are addresses that accumulate BTC over time and never engage in spending transactions, indicating a long-term holding strategy that creates a lack of sell-side pressure.

Consensys, the Ethereum software developer best known for its MetaMask wallet, has twice been hit by U.S. authorities’ attempts to exclude it from the financial system, despite the best efforts of its bank the second time around, founder and CEO Joe Lubin said in an interview.

The company survived what’s known as Operation Chokepoint 2.0 by holding redundant backup accounts to avoid getting into any operational difficulties. Lubin also said he was personally hit during the purge.

Chokepoint 2.0 refers specifically to the debanking of crypto businesses and executives as result of pressure exerted during President Joe Biden’s administration by regulatory authorities like the Federal Deposit Insurance Corp (FDIC). Consensys’ bank, which Lubin declined to identify, resisted lots of pressure to close its account, he said.

“The bank indicated to us they were getting a lot of pressure to shut down our account: a $7 billion company, always been an excellent customer for them,” Lubin said. “They basically said, ‘We like you guys. We don’t want to do this. We’re going to try to delay the process as long as possible, and we’ll let you know if we have to do something.’”

The initial Chokepoint, launched by the Department of Justice during the Obama administration, aimed to cut off access to banking services for legal but politically disfavored businesses, such as payday lenders and firearms dealers.

Crypto debanking has become a talking point in recent months, with leaders including Andreessen Horowitz boss Marc Andreessen and Ripple CEO Brad Garlinghouse discussing it in public. This week, it has come under Congressional scrutiny in a series of hearings, marking a further advance in the digital assets industry’s reversal of policy resistance in Washington under President Donald Trump’s administration.

Lubin’s comment shows that some banks deserve credit for trying to resist the pressure being exerted by U.S. authorities. Eventually, however, the pressure became too much and the bank caved.

“The bank finally said, ‘We can’t do anything more. We’re going to have to shut down your account. We’re very sorry,’” Lubin said.

A person familiar with the matter said the U.S. bank in question was Well Fargo. Wells Fargo declined to comment.

This was not the end of the story, however. After Trump’s election victory in November, the bank’s relationship manager reached out to the Consensys chief financial officer.

“Day after the election, the bank contacted one of our people in finance and said, ‘Hey, can we take you to a basketball game?’” Lubin said.

An earlier experience of Chokepoint was more brief and clinical.

“That was a previous banking partner,” Lubin said without naming the bank. “They closed my personal account and they closed the company account. They just wrote a very vanilla sounding letter. That was it.”

Riot Platforms (RIOT) mined 527 Bitcoin (BTC) in January, marking its highest monthly production since December 2023 and reflecting a 2% increase from the previous month, according to Farside data.

However, the broader bitcoin mining sector reported underwhelming production figures, with most major mining firms experiencing month-over-month declines.

MARA Holdings (MARA) mined 750 BTC in January, representing a 13% decline from December. Similarly, Cleanspark (CLSK) saw a 6% decrease, mining 626 BTC. Other mining firms also reported negative month-over-month production figures:

IREN (IREN): 2% decline

Core Scientific (CORZ): 13% decline

Cipher Mining (CIFR): 7% decline

Bitfarms (BITF): 5% decline

Hut 8 (HUT): 31% decline

The widespread decline in bitcoin production can be attributed to the increasing network difficulty, which both Riot and MARA’s CEOs cited as a key challenge.

“In January, our production saw a 12% month-over-month decline in blocks won, largely due to fluctuations in network difficulty and intermittent curtailment,” said Fred Thiel, MARA’s chairman and CEO.

“Riot mined 527 Bitcoin in January, marking the second consecutive month of increased production despite rising network difficulty,” said Jason Les, CEO of Riot.

Bitcoin’s mining difficulty adjusts every 2,016 blocks to maintain an average block time of 10 minutes. The next difficulty adjustment, set for Feb. 9, is projected to hit an all-time high, surpassing the previous record of 108.11 trillion (T).

Mining Stocks Performance Year-to-Date

Bitcoin has risen 4% YTD, serving as a benchmark for mining stocks. Among miners:

Cipher Mining (CIFR) is the standout performer, up 27%

IREN, RIOT, and CLSK have all posted double-digit gains

Bitdeer Technologies (BTDR) is down 25%

Core Scientific (CORZ) and TerraWulf (WULF) are both down approximately 10%.

Hive (HIVE), BTDR and WULF have yet to report January production figures.

Ether (ETH) has underperformed other cryptocurrencies in recent months as the Ethereum blockchain has faced “intense” competition from other networks, Wall Street bank JPMorgan (JPM) said in a research report on Wednesday.

The token lacks a compelling narrative like that of its larger peer bitcoin (BTC, the bank said, adding that bitcoin benefits from its perception as a store of value and as digital gold.

Despite upgrades, such as Dencun, activity has shifted from the main Ethereum network to its layer 2’s, which is detrimental to the blockchain’s growth, the report said. The network’s latest upgrade, Pectra, is likely to happen in early April.

“Competitive pressures have led some decentralized applications (dapps) to migrate from Ethereum to other application-specific chains for better performance,” analysts led by Nikolaos Panigirtzoglou wrote.

Examples include decentralized exchanges (DEXs) such as Uniswap, dYdX and Hyperliquid, the bank said.

Uniswap’s upcoming move to Unichain is important because it is one of Ethereum’s “largest gas consuming protocols,” and its migration could result in a significant loss to the network’s fee pool, the bank noted.

JPMorgan said this trend of dapps moving to other layer 2s or alternative layer 1s could negatively impact Ethereum by lessening activity on the main network, which could result in lower transaction fees and validator revenue.

Layers 2s are separate blockchains built on top of layer 1s, or the base layer, that reduce bottlenecks with scaling and data. In terms of supply, this could make ether inflationary as “fewer transactions imply reduced token burning,” the authors wrote.

The bank noted that Ethereum’s growth is behind that of competitors such as Solana, which saw a surge in activity linked to memecoins.

The Ethereum ecosystem still dominates the stablecoin, decentralized finance (DeFi) and tokenization spaces in spite of these challenges, the bank said.

The network could see increased institutional demand from tokenization enterprises but “competition from other networks is likely to remain intense in the foreseeable future,” the report added.

Read more: How to Fix Ethereum’s Fragmentation Problem

Alexey Pertsev, the Tornado Cash developer found guilty of money laundering in 2024, is set to be released from prison on Friday to prepare for his appeal, he said in a post on X.

The 31-year old Russian national was sentenced to 64 months in a Dutch prison last May after an indictment said Pertsev had “a habit of committing money laundering” and should have suspected illicit transactions on the platform.

Tornado Cash is a coin-mixing protocol that allows users to privately send tokens to another wallet. It achieves privacy by pooling funds together and shuffling them until the origin is unclear.

The protocol is sanctioned by the U.S. government, which alleges that Tornado Cash was being used by North Korean hackers Lazarus Group.

Bitcoin (BTC) continues to dawdle, failing to capture trader enthusiasm amid chatter about prices being overvalued, while gold remains strong ahead of the release of the U.S. jobs report, which will influence the Fed’s rate plans.

Recent analysis from CryptoQuant indicates that bitcoin’s fair value lies between $48,000 and $95,000, highlighting that it appears overvalued at its current market price, which hovers just above $98,000.

The analytics firm’s Bitcoin’s Network Activity Index has plummeted 15% from its peak in November to 3,760 points, the lowest level in over a year. The downturn is driven by a staggering 53% drop in daily transactions, which have fallen to 346,000 from September’s all-time high of 734,000.

Since its recovery from the slide early Monday, BTC has struggled to gain traction above $100,000. Market sentiment has likely been stifled, largely due to the Trump administration’s slow progress in establishing a proposed BTC strategic reserve.

Interestingly, Eric Trump recently encouraged investments in BTC through the family-affiliated World Liberty Financial, yet this endorsement failed to catalyze any significant upward movement.

In contrast, gold is getting all the love, having surged over 9% year-to-date to reach a record high of $2,882 per ounce, per data from TradingView. With a 2.32% increase this week alone, the yellow metal appears on track for its sixth consecutive weekly gain. UBS notes that gold’s rise underscores its “enduring appeal as a store of value and hedge against uncertainty,” drawing investors away from the tepid performance of Bitcoin.

Focus on Nonfarm payrolls

On Friday, the anticipated nonfarm payrolls (NFP) report will shed light on the state of employment for January, with estimates tracked by FXStreet suggesting a slowdown in job additions to 170,000 from December’s 256,000. The unemployment rate is expected to remain stable at 4.1%, with average hourly earnings anticipated to rise by 0.3% month-on-month, matching December’s pace.

A big miss on expectations could see traders reconsider the possibility of faster Fed rate cuts, sending the 10-year Treasury yield lower. That could spur demand for riskier assets like stocks and bitcoin. Moreover, the 10-year yield could see a sharp decline, given that the Trump administration is focused on lowering the same.

On the flip side, strong data, against the backdrop of the tariffs threat, would only complicate matters for the Fed, potentially leading to risk aversion.

Investment firm VanEck predicts Solana’s SOL will touch $520 by the end of 2025 as the demand for smart contract platforms (SCP) grows and M2 money supply increases in the coming months.

M2 money supply measures how much money is circulating in the U.S. economy, which tends to influence the crypto market. M2 money supply includes cash, checking deposits, and easily convertible near money like savings deposits and money market funds.

VanEck predicts M2 money supply will grow to $22.3 trillion by 2025 from the current $21.5 trillion. When central banks increase M2 by lowering interest rates or through quantitative easing, more money enters circulation, leading to more liquidity in the economy and encouraging investments in risk assets, such as cryptocurrencies.

On the other hand, the SCP market is where platforms like Solana operate, allowing for the creation and execution of smart contracts — which VanEck estimates could grow by 43% to reach $1.1 trillion by the end of 2025.

Currently, Solana holds about 15% of this market, but VanEck expects this will rise to 22% by the end of 2025.

“We forecast its share to rise to 22% by EOY 2025,” VanEck said in the Friday post. “This projection is supported by Solana’s developer dominance, increasing market share in DEX volumes, revenues, and active users.”

“Using an autoregressive (AR) forecast model, we estimate Solana’s market cap will reach ~$250B, implying a SOL price of $520 based on ~486M floating tokens,” it added. An autoregressive (AR) forecast model looks at past data to predict future values.

VanEck is among a bunch of U.S. firms that filed for a Solana ETF in 2024. Previously, the U.S. Securities and Exchange Commission (SEC) had previously refused to acknowledge several applications for ETFs tracking SOL and had told Cboe to take down its previously uploaded 19b-4s for those ETFs.

However, in a shift of tone on Thursday, the SEC acknowledged a filing by Grayscale for its SOL ETF, meaning that the commission now has until October to approve or deny the application.

The U.S. Securities and Exchange Commission took the first step toward allowing new crypto exchange-traded funds (ETFs) tracking the price of assets like Litecoin and Solana, as well as new ways of redeeming funds from existing crypto ETFs on Thursday, while companies took another step toward launching XRP ETFs in a further sign of the new crypto-friendlier administration at the agency.

Earlier Thursday, the SEC acknowledged a filing by Grayscale for a Solana (SOL) ETF, meaning that the Commission now has until October to approve or deny the application.

The SEC had previously refused to acknowledge several applications for ETFs tracking SOL and had told Cboe to take down its previously uploaded 19b-4s for those ETFs.

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence said the acknowledgement was “notable,” given that it’s the first time an ETF filing for a cryptocurrency that was previously deemed a “security” has been acknowledged by the SEC.

“We are now in new territory, albeit just a baby step, but seemingly the direct result of leadership change,” he wrote in a post on X.

The SEC also acknowledged a series of other crypto ETF-related applications on Thursday, including Grayscale’s filing for a Litecoin (LTC) ETF as well as BlackRock’s proposal to to allow for in-kind creations & redemptions on iShares Bitcoin ETF.

During U.S. evening hours, Cboe filed to list and trade shares of four separate ETFs looking to track the price of XRP (XRP).

The exchange filed four 19b-4 documents with the SEC on Thursday, for the prospective ETFs of Bitwise, 21Shares, Canary Capital, and WisdomTree.

All four issuers had previously filed S-1s, which are the first step in bringing an ETF on the market.

While Thursday’s actions don’t necessarily guarantee that the SEC will approve all of these products, they do show that companies feel more comfortable with expanding beyond just Bitcoin and Ether ETF products with the current SEC administration.

Donald Trump Jr. believes crypto to be the future of American dominance, he said in a conversation at the Ondo Summit in New York City on Thursday.

“I think it’s perhaps the future of American hegemony, in terms of our economic status, our economic might,” Trump Jr. said.

The son of the U.S. president made a surprise appearance at the event after World Liberty Financial (WLF), the crypto project backed by the Trump family, bought Ondo’s native cryptocurrency (ONDO) earlier today.

“We do have to create that framework in which [crypto], which I believe to be the future of finance, where we can play, where there is an understanding of what that is but also where it’s not so over-regulated by people who don’t know what they’re talking about that you lose everything that it stands for,” Trump Jr. said.

Chase Herro, co-founder of World Liberty Financial, also said that the protocol will soon launch a “strategic reserve” of crypto assets. “We are big builder fans.”

WLF made headlines over the past months investing in multiple tokens including ETH, wrapped BTC, Tron’s TRX, AAVE, Chainlink’s LINK among other. World Liberty Financial acquired about $470,000 worth of ONDO tokens today soon after Ondo Finance announced plans to launch Ondo Chain, a layer-1 blockchain designed for tokenized assets.

During U.S. morning hours, Trump’s social media company revealed that it was looking to launch a series of exchange-traded funds (ETFs), one of them which would track the price of bitcoin (BTC) called the Truth.Fi Bitcoin Plus ETF.