Bitcoin (BTC) has soared to new heights, recently touching the $97,000 mark in one of its strongest rallies to date. Yet beneath this price explosion lies a puzzling contradiction: on-chain activity is alarmingly muted. As Bitcoin’s value climbs, its network appears to be stagnating—raising concerns among analysts that the rally may be more hype than substance.

Recent data reveals that despite Bitcoin’s price gains, network usage has failed to keep pace. According to CryptoQuant, the number of Active Addresses on the Bitcoin blockchain remains below expectations. In fact, it has only exceeded one million a handful of times in recent months. At the time of writing, the figure stood at just under 959,000—far from what one would expect at these price levels.

So what’s causing this disconnect between price and actual usage? An analysis from Alphractal points to six major reasons behind the sluggish on-chain metrics, despite Bitcoin’s bullish chart performance.

The first and perhaps most significant factor is the influence of institutional investment. Bitcoin’s current rally is being fueled largely by capital inflows into Spot Bitcoin ETFs, particularly from major players like BlackRock, MicroStrategy, and Metaplanet. This has turned BTC into a favored institutional asset class rather than a grassroots digital currency. As a result, the buying pressure is coming from custodial platforms and investment firms—not from active network participants.

Secondly, volatility—or the lack of it—is playing a role. Bitcoin has spent several weeks consolidating in a tight range between $92K and $95K. In low-volatility environments, there’s little incentive for wallet holders to move their funds or engage in frequent transactions, which naturally drags down on-chain activity.

Another issue is misleading exchange volume. While Bitcoin appears to be trading at high volumes, a closer look suggests some of this may be artificial or inflated. This creates a false perception of vibrant market activity, even as actual blockchain usage remains underwhelming.

Adding to the challenge is the growing competition from other blockchain networks. Ethereum, Solana, and even newer entrants like Base are increasingly becoming hubs for DeFi activity, staking, and coin speculation. These use cases were once the domain of Bitcoin in its early days, but the evolving crypto landscape has pushed BTC more into a store-of-value role rather than a utility-focused network.

Furthermore, Bitcoin’s original role as a decentralized payment method has lost momentum. Fewer merchants and users are using BTC for everyday transactions, opting instead for faster and cheaper alternatives. As a result, the number of real-world transactions on the Bitcoin network has dwindled, especially when compared to networks actively supporting smart contracts and dApps.

Lastly, the rise of second-layer solutions like the Lightning Network is also skewing the numbers. As more transactions move off-chain for scalability and speed, the Bitcoin mainnet appears quieter. While this is technically a sign of progress, it distorts the traditional metrics used to measure on-chain engagement.

All these factors point to a critical reality: Bitcoin’s soaring price is no longer tightly coupled with its blockchain usage. Instead, BTC is increasingly behaving like a traditional financial asset—used for holding and speculation rather than spending or interacting within a decentralized network.

This decoupling could have significant implications for Bitcoin’s sustainability. Historically, strong on-chain activity—especially from retail users—has supported long-term price growth and adoption. With institutions now dominating the flow and retail largely inactive, the rally may lack the foundation needed for lasting momentum.

In conclusion, while Bitcoin’s climb to $97,000 marks an impressive milestone, it comes with a caveat. Without renewed on-chain activity and broader participation, this bull run may be vulnerable to correction. Investors would be wise to look beyond the price chart and consider the network fundamentals when evaluating BTC’s future trajectory.