Bitcoin is facing strong selling pressure, and capital continues to flow out of US spot BTC ETFs. At the same time, new data suggests a deeper problem may be going on beneath the surface. Market analysis firm Santiment reports that Bitcoin network activity is now at about half its 2021 level, with both a sharp decline in active addresses and the creation of new addresses, even as the market capitalization has reached new highs in 2025.
In brief
- Bitcoin network activity has fallen to around half its 2021 level with a sharp drop in active and newly created addresses.
- Analysts note that this decline does not mean the end of the crypto market nor a prolonged collapse.
- Bitcoin is showing a rare historical pattern of five consecutive red monthly candles, a situation that has preceded strong rallies in past cycles.
Network engagement drops sharply
Santiment's assessment highlights a marked slowdown in on-chain participation since February 2021. The firm's data shows that unique Bitcoin addresses transacting have declined by 42% over the past five years. Additionally, the number of new BTC addresses created fell by 47% over the same period.
Despite this sharp reduction in engagement, Santiment rejects the idea that this decline signals the end of the crypto market or the start of a prolonged collapse lasting several years. Rather, the platform highlighted a bearish divergence that developed throughout 2025. As overall market capitalizations reached new highs, Bitcoin's underlying usage indicators weakened. This disconnect, according to Santiment's analysis, reflects a cooling of utility rather than complete structural collapse.
The firm said a convincing long-term recovery would likely require renewed growth in key metrics such as active addresses and overall network expansion. Improvements in these measures would signal the return of participation. Although altcoins often take cues from the general direction of Bitcoin, Santiment noted that individual tokens can still experience independent rallies if their network activity strengthens.
Bitcoin Price Faces Resistance Due to Liquidity Constraints
The decline in engagement on the network comes as the price of Bitcoin remains under sustained pressure. After hitting a record high of $126,000 in October, the asset fell to around $67,000, marking a 46% decline from its all-time high.
On-chain analytics provider Glassnode observed that since early February, repeated efforts to regain the $70,000 level have failed. Even periods with over $5 million per hour in net realized profits proved insufficient to sustain a breakout, with buying demand fading quickly.
This contrasts sharply with the third quarter of 2025, when profits jumped to between $200 million and $350 million per hour during a phase marked by strong optimism. Glassnode further noted that thin liquidity conditions make a stable return to the $70,000–$80,000 range difficult. Limited order book depth on both sides amplified volatility and hampered recovery attempts.
Rare Historical Bitcoin Pattern Emerges
Amid this downturn, Bitcoin is also displaying a historically rare technical setup. Crypto analyst Ash Crypto has indicated that Bitcoin is on track to record its fifth consecutive red monthly candlemarking only the second time this has happened in its history. The first occurrence was during the 2018–2019 bear market.
After this prolonged decline, Bitcoin recorded five consecutive green monthly candles, producing a four-fold increase in price. Three of these advances generated gains of more than 25%. Historical precedent suggests that prolonged declines have previously been followed by powerful rebounds.
However, past cycles do not guarantee similar results. Broader factors—such as regulatory changes, liquidity fluctuations, and institutional positioning—can alter market trajectories. Although long bear periods have historically set the stage for strong recoveries, the timing and magnitude of any rebound remains dependent on evolving macroeconomic and structural conditions.
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