Bitcoin Network Volume Echoes Mid-2021 ‘Stable Equilibrium’ – Is A Big Move Brewing?

[Ben Graham]

After rebounding from a local bottom of around $75,000 in April, Bitcoin (BTC) appears to be stuck in the $100,000 to $110,000 range, showing little indication of a clear directional trend. One key data point reflecting this indecision is Bitcoin’s network volume.

Bitcoin Network Volume Stuck In Balance Zone

According to a recent CryptoQuant Quicktake post by contributor AxelAdlerJr, Bitcoin’s network volume has stabilized in a state of ‘stable equilibrium,’ reminiscent of the mid-2021 consolidation phase that preceded a major move.

For the uninitiated, Bitcoin network volume refers to the total value of BTC transferred across the blockchain over a specific period, typically used to gauge market activity and capital flow. Higher network volume suggests increased investor engagement and liquidity, while lower volume may indicate reduced interest or market stagnation.

Notably, when BTC reached the upper end of its current range – around $110,000 – its average network volume surged to as high as $67 billion. Since then, the metric has slightly declined and now hovers around $58.7 billion.

Since January 2024, Bitcoin’s average network volume has ranged between $40 billion and $80 billion. According to the CryptoQuant analyst, this corridor has become a key indicator of network activity balance and broader market sentiment.

Historically, when the Bitcoin average volume approached the upper-end of the range at $80 billion, it coincided with local price peaks of $70,000 and $100,000. On the contrary, moves toward the lower-end – around $40 billion – were associated with short-term pullbacks, though these dips were often quickly bought up by market participants.

Currently, the $58.7 billion reading sits near the midpoint of this range, mirroring the consolidation phase observed in mid-2021. The analyst explained:

As long as the indicator remains above the $40 billion level, we can speak of a stable fundamental market condition. Rising volumes above the $80 billion mark will confirm strengthening activity and fresh capital inflow. On the other hand, a sustained drop below $40 billion will indicate weakening network demand and may be a harbinger of a deeper correction.

Is BTC Preparing For A Big Move?

While Bitcoin network volume suggests the market is in a state of equilibrium, some on-chain metrics hint at a potential breakout building in the background – possibly paving the way for renewed bullish momentum.

For example, the BTC short-term holder floor has been rising steadily in recent months, currently hovering around $98,000. This provides a strong support base, potentially preventing a sharp downside correction.

However, selling pressure from miners and long-term holders is also beginning to increase – casting some uncertainty over BTC’s short-term price trajectory. At press time, BTC trades at $106,528, down 0.9% in the past 24 hours.