Bitcoin price action remains trapped in a bearish structure established in late October, with bulls unable to reclaim key resistance levels despite brief relief rallies. The cryptocurrency's current behavior has prompted questions about whether traditional cycle frameworks still apply, particularly as on-chain data reveals a fundamental shift in network participation.
What Happened: Network Activity Decline
Bitcoin active addresses have declined persistently since April 2021, according to analysis by Darkfost. The metric peaked at approximately 1.15 million addresses during the April 2021 high but has since contracted to near 680,000—a reduction of roughly 42%.
This decline marks a departure from previous cycles, where bullish phases featured clear expansion in active addresses as new investors entered the market and on-chain activity surged.
Even during strong price performance since 2022, active addresses have failed to recover and continue trending lower, suggesting the network is evolving away from a retail-driven participation model toward a more concentrated, institutionally influenced structure.
The contraction likely reflects multiple factors, including increased long-term holding behavior where coins remain dormant rather than actively transacted.
Additionally, market participants have shifted toward centralized exchanges, custodial platforms and exchange-traded funds that provide Bitcoin exposure without requiring on-chain interaction, reducing demand for block space even as capital allocation remains significant.
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Why It Matters: Technical Outlook
Bitcoin currently trades near $87,000, testing critical support aligned with long-term moving averages after failing to sustain prices above the $100,000-$110,000 zone. The short- and medium-term moving averages have rolled over, now acting as dynamic resistance rather than support.
Price hovers just above the long-term moving average that historically has defined the boundary between bull market corrections and deeper bearish transitions.
A breakdown below the $85,000-$88,000 range would increase downside risk toward the low-$80,000 region, while reclaiming $95,000-$100,000 is required to neutralize the current bearish structure.
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