Bitcoin’s Q1 paradox: Prices up by 69%, but not all good news because…

• BTC’s price rose by 69% in Q1.
• However, during the same period, its blockchain witnessed a decline in activity.

User activity on the Bitcoin [BTC] network declined in the first quarter, despite the significant rally in its coin’s price during that period, Messari found in a new report. 

In its report titled “State of Bitcoin Q1 2024,” the onchain data provider found that during the 90-day period, the demand for the Bitcoin network fell.  

The average daily count of addresses that completed at least one transaction on the blockchain during the quarter totaled 895,000. This represented a 5% decline from the 937,000 average daily active addresses on the Bitcoin network in the last quarter of 2023.

The decline in the number of active addresses on the blockchain resulted in a fall in the count of transactions completed on it during the quarter under review. According to Messari, average daily transactions on the network fell by 15.3%.

Commenting on what might have been responsible for the decline in network activity, Messari said: 

“The changes suggest that the transaction decline may have come from decreased activity from bots or “super users” (users that transact often and account for a large portion of the activity).”

Due to the fall in transaction count on the network, the average fee received per transaction also declined. During the quarter under review, overall fees made by the Bitcoin network cratered by 42%. 

Some wins to its name 

The year’s first quarter saw a significant rally in BTC’s value. Between 1st January and 31st March, the coin’s price rose by 69%. The coin closed the quarter at $71,310 and reached a new all-time high during that quarter.

Messari said that spot BTC ETFs which received their long-awaited approval in January, “were perhaps the largest catalyst” for the price growth recorded. During Q1, all 11 ETF providers recorded inflows totaling $12.04 billion. 

The quarter was also marked by an increase in block size due to inscription-related activity.

Read Bitcoin’s [BTC] Price Prediction 2024-25

According to Messari:

“More recently, on March 2, 2024, Marathon mined a block at 3.99 MB. Following that, F2Pool mined a block at 3.97 MB on March 30, 2024.”

Regarding network security, its hashrate increased 19% quarter-over-quarter. As of this writing, the Bitcoin network’s hashrate was 688.8973E, rising by 16% since the beginning of April, according to BitInfoCharts data.