Bitcoin's Bulls Have Lost, They Just Don't Know It Yet

Summary Bitcoin remains a 'strong sell' due to collapsing trading activity, declining active addresses, and waning real-world utility. BTC's price is increasingly driven by ETF inflows and speculative trading, not genuine adoption or use as a store of value. Long-term holders are shrinking, and payment usage is stagnating, undermining the narrative of BTC as a viable medium of ￰0￱ are rapidly gaining traction for payments, while BTC's relevance and utility continue to diminish, supporting a highly bearish long-term ￰1￱ you have followed my work closely, you certainly know my antipathy for Bitcoin USD ( BTC-USD ). My last article about the faux currency was published in July of this ￰2￱ it, I acknowledged that the price had been surging.

I talked about how bullish arguments put out by proponents of it were actually double-edged and that most major metrics that would paint a picture of the validity of Bitcoin as a long-term opportunity were looking worse and worse. I ultimately kept my ‘strong sell’ rating on ￰3￱ since then, it is down 7.1%, while the S&P 500 is up 5.1%. This kind of fluctuation is not ￰4￱ fans of cryptocurrencies like Bitcoin will agree that it is incredibly ￰5￱ a 20% drop or a 20% gain in the span of a couple of months would not be ￰6￱ that in and of itself is not validation as to my ￰7￱ looking at new data, as well as updated data from my last article, I remain confident that the long-term outlook for Bitcoin is ￰8￱ fact, I view it as being very nearly ￰9￱ over the long run, I fully expect it to fall ￰10￱ Activity Is Collapsing Just like with most companies, there is no single perfect metric to look at when it comes to analyzing Bitcoin.

Instead, we need to take a multifactorial ￰11￱ when you do, most of the data points toward a very bearish ￰12￱ in point, we need only look at ￰13￱ the chart below, you can see the volume as measured by both dollar amounts and the number of bitcoins traded, over the last several ￰14￱ has been a nasty decline in overall ￰15￱ peaking at $63.9 billion in November of last year, volumes have fallen to hit only $18.8 billion by the end of ￰16￱ - Data from Bitbo The argument here is that not only are we seeing a decline in the number of Bitcoin being transacted, but we are also seeing a drop in the effective value of it being ￰17￱ is important, because it means that the price increases that we have seen, shown in the aforementioned chart, have been propped up by lower and lower ￰18￱ creates risk for market participants because it means that prices are being driven by a smaller group of traders and by hoarding activity as opposed to broad-based participation in the ￰19￱ more traditional markets, this would be present in late-stage speculative ￰20￱ essence, eviction is high among ￰21￱ real use is drying up, and liquidity becomes increasingly problematic because it could mean a rather rapid decline in prices should market participants suddenly realize that there is no real value ￰22￱ - Data from Glassnode Studio This is not the only problematic ￰23￱ hailed as a sign of growing adoption, the number of active addresses associated with Bitcoin has now become a major ￰24￱ essence, the number of active addresses means the number of different accounts that transacted in Bitcoin in any way, either with incoming transactions or outgoing transactions, in the timespan in ￰25￱ table above illustrates how this has changed, with the most recent data coming from August of this ￰26￱ far in 2025, the number of active addresses has averaged 13.28 million.

That's the lowest we have on record, dating back to at least the year ￰27￱ in the chart below, you can see how, for the 2021 through 2025 years, both the 8-month average and the trailing 12-month average have ￰28￱ activity means that even as prices increase, those engaging in cryptocurrency are becoming less and less ￰29￱ - Data from Glassnode Studio ETF Flows Hide The Reality That Bitcoin Is A Financial Product Author - Data from CoinMarketCap Bitcoin bulls can realistically argue that this is just evidence that the cryptocurrency is becoming less speculative and being treated more as a real store of value, like gold or ￰30￱ the evidence there is mixed at ￰31￱ the most charitable metric to support this view is the fact that Bitcoin has become increasingly used in ￰32￱ more ETFs roll out, this is, in fact, what's ￰33￱ I don't view the data as favorably as other market ￰34￱ the chart above, you can see the total value of cryptocurrency held in ETFs for every month from January of 2024 through the present ￰35￱ middle of this month saw an all-time high of $151.02 billion tied up in ETFs.

That's astronomically higher than the $28.35 billion that we had in ￰36￱ also happens to be 189.8% greater than the $52.12 billion worth of Bitcoin seen in October of last ￰37￱ - Data from CoinMarketCap Even though the price of Bitcoin has risen, that alone is not enough to account for this increase in ETF ￰38￱ chart above shows monthly inflows, on a net basis, of Bitcoin over the same time as the prior graph ￰39￱ while there have been some months of outflows, the overall trend has been toward additional ￰40￱ in the chart below, we can see that the percentage of the market capitalization of all Bitcoin that's held in the form of assets under management has been on the ￰41￱ January of last year, it was only 3.4% of the ￰42￱ today, it stands at an all-time high of 7%.

On its own, this is a bullish sign of greater ￰43￱ other data points show a much more complicated picture than ￰44￱ - Data from CoinMarketCap In my previous article about Bitcoin, I discussed the 1-Year HODL Wave , which essentially refers to the percentage of Bitcoin holders, as measured by addresses or wallets, that have held the cryptocurrency for at least one year without conducting any outgoing ￰45￱ increase in this metric would indicate that more and more holders of Bitcoin are holding it for the long ￰46￱ lately, that metric has been ￰47￱ - Data from Bitbo The chart above shows the 1-Year HODL Wave relative to the price of Bitcoin measured on a logarithmic ￰48￱ relative decline that we are seeing is often interpreted as an indicator that Bitcoin is in a bullish ￰49￱ logic here is that long-term holders, seeing the surge in pricing, decide to take profits by selling their coins into the market just as speculative demand is ￰50￱ volumes, like what we have already seen, helped to fuel that rally because there are more buyers than ￰51￱ short, this is all evidence of early investors exiting, and latecomers, lured in by the speculative flurry, put their own chips on the ￰52￱ of Bitcoin will happily liken the cryptocurrency to gold or other historical stores of value.

I reject this comparison, and, in previous articles , I have detailed out exactly why this is an apples-to-oranges comparison. I don't think it would be valid brought to you, the reader, for me to rehash those details when I can just refer you, to that aforementioned ￰53￱ one thing that I do feel compelled to mention is that this idea of Bitcoin as a store of value is nonsense. Gold, as an example, is significantly different from the cryptocurrency in some very important ￰54￱ emerged not as a store of value, but instead as a means to transact in a decentralized way that allows the parties involved to instantly transfer capital from one part of the world to the other relatively ￰55￱ underlying blockchain technology that makes Bitcoin possible is truly ￰56￱ has significant implications for financial markets and other aspects of ￰57￱ that is distinct from Bitcoin on its ￰58￱ the case of gold, it has become a store of ￰59￱ in recent months, as I have detailed in another article, it has done exceptionally well because of broader economic ￰60￱ the store of value that gold has become only happened after it demonstrated its ￰61￱ today, gold has significant ￰62￱ there has been a drop recently because of the surge in pricing, making it unaffordable, in 2024, 43.8% of all gold demand was for jewelry ￰63￱ 7.1% was for use in ￰64￱ meant that 50.9% of all gold demand last year was dedicated to some end use that did not include central banks and investors utilizing it as a store of ￰65￱ Decline Of Real-World Use Bitcoin has become detached from its original ￰66￱ in this space is actually incredibly difficult to come ￰67￱ we have to piece it together based on what is out ￰68￱ first place we should look is the Lightning ￰69￱ of real limitations to on-chain transactions, the Lightning Network was developed to serve as essentially a second layer that helps to facilitate ￰70￱ this network, individuals can set up a payment channel that allows them to send money back and forth instantly, which allows them to avoid recording each individual payment ￰71￱ the final balance is ultimately recorded on the ￰72￱ essence, this is a mechanism aimed at bundling ￰73￱ - Data from TheBlock This has, in the past, been used as a proxy for real-world payment ￰74￱ though it does not measure the actual number of transactions, its overall network capacity is a true measure of how much Bitcoin is committed to the network.

Conceptually, as merchant and payment processing optimism grows, you would expect the overall amount of Bitcoin capacity to ￰75￱ in the chart above, you can see how, starting around late 2024, we started seeing a decline in ￰76￱ various reasons that are frankly outside of the scope of this article, this is far from a perfect indicator of what is going on from a user adoption ￰77￱ it does serve as a single data point that gives us a clue of what is happening from a real end-use ￰78￱ short, it is proof that there is waning confidence in bitcoin's role as a medium of ￰79￱ Reserve We do have more concrete data that points toward a detachment from its original ￰80￱ fact, just last month, the Federal Reserve came out with its own analysis of how US consumers are using cryptocurrency for ￰81￱ to them, in 2024, only 1.9% of US consumers used any cryptocurrency for payments.

I know that the payment space is astronomically ￰82￱ I wouldn't expect it to account for a large ￰83￱ if cryptocurrency was truly destined to succeed, I would expect its share of payment activity to grow over ￰84￱ it really hasn't. In fact, in 2022, 2.7% of US consumers used it for ￰85￱ the year before that, it was 2.6%. Federal Reserve What's really interesting here is when you dig deeper, you find that those consumers who are using it aren't using it because they want ￰86￱ are essentially facilitating transactions using this method because it is the preference of the individual receiving ￰87￱ chart above shows that 35.4% of all cryptocurrency payments made last year were done so because the payee preferred ￰88￱ was up from 21.2% experienced just two years ￰89￱ the same time, privacy as a reason dropped from 19.6% to 12.3%.

The speed that cryptocurrency offers was demoted as a reason from 20.8% to 17.7%. Safety dropped from 9.3% to 4.9%. And distrust in banks declined from 5.5% to 3.1%. In short, people weren't happy to use cryptocurrency to make ￰90￱ feel compelled to because of the desire of the person they are ￰91￱ Are What Bitcoin Was Supposed To Be Visa I don't think this bodes particularly well for the continued adoption of Bitcoin, specifically as a medium of ￰92￱ who are bullish about it will certainly disagree, and they do have some data to back their ￰93￱ instance, only between 5% and 10% of US merchants actively accept cryptocurrency ￰94￱ over the next two years, this figure is expected to grow to more than 75%.

And right now, 42% of all merchant cryptocurrency transactions are being conducted using ￰95￱ I would interpret this in a very different ￰96￱ fact of the matter is that Bitcoin is poorly equipped to serve as a medium of ￰97￱ often worry about their own profit margins above all ￰98￱ the volatility that Bitcoin embodies can take a profitable transaction and make it unprofitable in the span of days, hours, or even minutes. I fully expect, because of this, for Bitcoin's share of merchant cryptocurrency transactions to fall ￰99￱ does not mean, however, that I'm bearish on all ￰100￱ In fact, recently, I have written favorably about ￰101￱ signing of the Genius Act earlier this year should help to pave the way for the growth of these types of transactions as time goes on.

I detailed as much in an article about payment processing behemoth Visa ( V ). For that company, I believe that the adoption of stablecoin could end up being quite bullish. I recently wrote another article about PayPal ( PYPL ) and its move into stablecoin ￰102￱ Visa has actually come out with a lot of data regarding stablecoin ￰103￱ October of this year, they estimated that there was $266.17 billion worth of stablecoin outstanding. That's up from the $161.75 billion reported a year ￰104￱ September of last year through September of this year, the total value of payments made using stablecoin, on an adjusted basis, shot up from $398.19 billion to $1.03 ￰105￱ if we restrict this to retail transactions, which the company defines as those of less than $250, the jump was from $3.38 billion to $6.35 billion.

What's more, the number of active unique stablecoin wallet addresses has shot up from 27.95 million in September of last year to 51.11 million at the same time this ￰106￱ Takeaway In my view, the future for stablecoin is ￰107￱ for Bitcoin, it's ￰108￱ cryptocurrency is unlikely to ever achieve major adoption when it comes to merchant ￰109￱ fact, I expect it to become less relevant as time goes ￰110￱ means that all speculation around it is as a store of value, which, as I've detailed already, is becoming increasingly less ￰111￱ only serves as a good store of value if it has ￰112￱ Bitcoin fails on that ￰113￱ fact of the matter is that long-term holders are ￰114￱ is ￰115￱ number of active addresses continues to ￰116￱ all signs point toward weakness when it comes to its potential for some actual productive use.

Yes, we are seeing inflows when it comes to ￰117￱ that only furthers my case that this is being used as a speculative instrument in a highly financialized market as opposed to a real-world paradigm shift in how consumers ￰118￱ the end of the day, I don't see any reason to be anything other than incredibly bearish about ￰119￱ while it is possible the price could surge in the near term, I fully believe that it will eventually plunge very close to $0.