The Bitcoin network remains a cornerstone of the digital asset ecosystem, demonstrating resilience and structural evolution amid shifting market dynamics. Despite volatility in revenue and investor sentiment, key network participants—especially miners—continue to exhibit strong confidence through sustained investment and infrastructure expansion. This analysis explores the current state of Bitcoin’s mining activity, transaction throughput, investor behavior, and the growing influence of spot ETFs.
Mining Activity: Confidence Amid Declining Revenue
Miners are fundamental to the Bitcoin network, serving as the backbone for block validation and new coin issuance. By contributing computational power (hash rate), miners compete to solve complex cryptographic puzzles, earning rewards in the form of newly minted BTC and transaction fees.
This process is inherently competitive and capital-intensive. Miners face fixed costs—primarily energy and hardware—while revenue fluctuates with BTC’s market price and fee income. Despite these challenges, the network’s hash rate remains near all-time highs, currently averaging 666.4 EH/s over a 14-day moving average—just 1% below its peak. This sustained growth reflects strong long-term conviction among mining operators.
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Bitcoin’s protocol automatically adjusts mining difficulty to maintain a consistent block time of approximately 10 minutes. As more computing power joins the network, the difficulty increases. The current average number of hashes required to mine a single block stands at 338 quadrillion, marking the second-highest level in Bitcoin’s history. This underscores the growing competitiveness and efficiency of the mining industry.
However, miner revenues have declined significantly since Bitcoin’s price peaked in March 2024. While block subsidy income remains relatively high—thanks to BTC trading above $55,000—it is still about **22% below prior highs**. Transaction fee income has also dropped sharply, falling to around **$20 million**, down from previous peaks driven by high demand for inscriptions and Rune-related transactions.
- Block subsidy revenue: $824 million
- Transaction fee revenue: $20 million
This dual pressure suggests increasing financial strain. Yet, a notable behavioral shift has emerged: miners are no longer net sellers of their mined supply. Historically, miners sold most of their BTC to cover operational costs. Now, many are holding portions of their output, indicating stronger balance sheets and confidence in future price appreciation.
This change highlights a maturing industry—one that is becoming more resilient to short-term market fluctuations.
On-Chain Settlement: Cooling Network Activity
On-chain transaction volume serves as a key indicator of Bitcoin’s utility as a settlement layer. Adjusted for entity activity, the network currently settles approximately $6.2 billion in value per day. While this reflects substantial economic activity, the trend is downward.
Settlement volume has begun reverting toward its annual average, signaling a notable cooldown in network usage and transaction throughput. This decline suggests reduced demand for direct on-chain transfers, potentially due to lower speculative activity or increased use of Layer-2 solutions like the Lightning Network.
A sustained drop in settlement volume could indicate waning adoption momentum, especially if it persists alongside price stagnation or decline.
Declining Trading Demand: Reduced Investor Engagement
Centralized exchanges remain central hubs for price discovery and speculative trading. Analyzing exchange inflows and outflows provides insight into investor sentiment and market participation.
Recent data shows that 30-day average trading volumes are significantly below their 365-day averages. This momentum crossover indicates weakening investor engagement and reduced speculative interest within the current price range.
To further assess market dynamics, we examine spot trading volume, normalized using a 90-day MinMax scale (ranging from -1 to 1). The results confirm a continued decline in trading momentum over the past quarter—a clear sign of shrinking liquidity and participation.
The Cumulative Volume Delta (CVD) metric offers additional clarity by tracking net buying versus selling pressure. Over the last 90 days, CVD has trended negative, reflecting growing selling pressure from investors and contributing to downward price pressure.
Interestingly, while trading volume and CVD point to bearish conditions, price momentum itself shows mixed signals. August displayed both positive and negative swings, suggesting market indecision rather than a clear directional bias.
When combining these three indicators—spot volume momentum, CVD, and price momentum—into a unified sentiment heatmap (scaled from -1 to 1), the data converges on a low-risk environment:
- 🟢 1 = High risk
- 🟡 0 = Medium risk
- 🔴 -1 = Low risk
All three metrics now reside near -1, indicating low-risk conditions characterized by weak volume, net selling pressure, and slow price depreciation. Such a structure is vulnerable to external catalysts—positive or negative—that could trigger a breakout.
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ETF Impact: Bitcoin Dominates Institutional Interest
The launch of U.S.-based spot Bitcoin ETFs in January 2024 marked a watershed moment for crypto adoption. This was followed by the approval of spot Ethereum ETFs in August, representing another step toward mainstream integration.
Despite both products being available, investor appetite differs dramatically. Since August, Bitcoin ETFs have experienced weekly net outflows averaging $107 million. However, this outflow occurs against a backdrop of much higher overall demand compared to Ethereum.
Ethereum ETFs have seen even weaker performance, with total net outflows reaching $13.1 million. Much of this stems from redemptions in Grayscale’s ETHE fund, which have not been offset by sufficient inflows into competing products.
To compare institutional impact across assets, we normalize ETF flows against respective spot trading volumes. The results are striking:
- Bitcoin ETFs influence approximately ±8% of daily spot volume
- Ethereum ETFs affect only ±1%
This means Bitcoin ETFs exert eight times more relative market impact than their Ethereum counterparts—even after accounting for differences in market size and liquidity.
The disparity highlights Bitcoin’s dominant position as the preferred institutional gateway into digital assets.
Frequently Asked Questions (FAQ)
What is Bitcoin's current hash rate?
As of the latest data, Bitcoin’s 14-day average hash rate stands at 666.4 EH/s, just 1% below its all-time high. This reflects strong ongoing investment in mining infrastructure.
Why are miner revenues declining?
Miner revenues have dropped due to falling transaction fees—driven by reduced demand for inscriptions and Rune activity—and a lower BTC price compared to earlier 2024 highs. Block subsidy income remains stable but is still down ~22% from peak levels.
What does low on-chain settlement volume mean?
A decline in daily settlement value—from recent highs toward annual averages—suggests reduced network usage for direct transfers. This may reflect lower speculation or increased adoption of off-chain scaling solutions.
Are investors still interested in crypto ETFs?
Interest remains, but demand has cooled since initial launches. Bitcoin ETFs continue to see stronger institutional engagement than Ethereum ETFs, despite both experiencing recent outflows.
How do ETF flows affect cryptocurrency prices?
ETF inflows increase buying pressure as funds purchase underlying assets; outflows create selling pressure. Bitcoin ETFs now represent up to 8% of daily spot volume, making them a significant price-influencing factor.
Is Bitcoin entering a low-risk market phase?
Yes. Indicators including weak trading volume, negative CVD, and flat price momentum suggest a low-risk environment. However, such phases can quickly shift with new catalysts like macroeconomic news or regulatory developments.
Conclusion
The Bitcoin network continues to demonstrate strength at its core: miners are investing heavily despite declining revenues, hash rate and difficulty remain near record levels, and institutional interest—though cooling—is still heavily skewed toward BTC over other assets.
At the same time, signs of weakening investor engagement are evident. Exchange trading volumes are down, on-chain settlement activity is cooling, and both Bitcoin and Ethereum ETFs are seeing outflows. Yet, Bitcoin maintains a clear lead in market relevance and institutional adoption.
As the ecosystem evolves, understanding these layered dynamics—mining fundamentals, investor behavior, and financial product adoption—becomes essential for navigating the future of digital assets.
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