Bitcoin Surpasses $110,000 — But On-Chain Activity Tells a Different Story

Bitcoin (BTC) Surpasses $110,000 — But On-Chain Activity Tells a Different Story

On May 22nd, Bitcoin’s price soared past $110,000, capturing widespread attention. However, beneath the surface, Bitcoin’s blockchain activity has quietly fallen to record lows, revealing a striking divergence between its market valuation and actual network usage.

As more users migrate to centralized exchanges (CEXs) and alternative, lower-cost networks for everyday transactions, Bitcoin’s role is shifting. It is gradually moving away from its original peer-to-peer currency function and solidifying its position as a high-value store of wealth.

Is this the final confirmation that Bitcoin has truly become digital gold — in function, not just in name?

Subdued Demand in a Booming Market

• Mean transaction fees currently hover around $1.50, an anomaly when compared to past bull markets.

• Historical rallies—such as those in 2017, 2021, and late 2023—saw fees spike dramatically, often surpassing $60 and even $120, driven by memory pool (mempool) congestion and intense on-chain speculation.

This cycle, despite Bitcoin’s surging price, the mempool remains calm with minimal fee pressure. Transactional demand hasn’t increased accordingly, as users either hold their assets or transact primarily via centralized platforms rather than on-chain.

Where’s the Frenzy?

In previous bull markets, Bitcoin’s mempool was flooded with tens of thousands of unconfirmed transactions, a clear indicator of speculative urgency. Today’s cycle, despite record-breaking prices, is remarkably quiet.

• Mempool activity in 2025 is notably thin compared to the intense backlogs of 2017 and 2021, when unconfirmed transactions regularly exceeded 150,000.

• This minimal congestion suggests a lack of urgency among users.

• Many traders are bypassing Bitcoin’s base layer for faster, cheaper alternatives—or simply opting to hold.

• Consequently, the Bitcoin network itself is not reflecting the hype seen in price action.

Quiet Success or Shrinking Retail Participation?

• SegWit adoption has surged since 2021 and now accounts for the vast majority of Bitcoin transactions.

• This upgrade has improved block space efficiency, reduced fees, and enabled smoother network throughput.

However, SegWit dominance may be a double-edged sword:

• On one hand, it indicates network optimization, with fewer bytes per transaction.

• On the other, the sharp decline in non-SegWit activity could signal a reduction in casual or legacy users.

Bitcoin’s current usage profile appears skewed toward high-efficiency, institutional-scale transactions rather than the grassroots retail traffic that previously congested the network during retail-driven surges.

Where Is the Activity Going?

• Centralized exchanges now handle the majority of Bitcoin’s transactional flow.

• Alternative networks such as TRON lead retail and stablecoin transfers — especially USDT — due to low fees and near-instant finality.

• Meanwhile, Lightning Network adoption for everyday peer-to-peer payments has slowed, hindered by user experience challenges and limited liquidity.

As the cryptocurrency ecosystem evolves, users are increasingly gravitating toward centralized or highly optimized platforms for routine transactions, underscoring a significant shift in Bitcoin’s transactional landscape.

Dimitar Todorov publication: "Bitcoin Surpasses $110,000 — But On-Chain Activity Tells a Different Story" was written for 24crypto.news

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