Greg Cipolaro, Global Head of Research at NYDIG, noted that Bitcoin has soared to new all-time highs this week, breaching key price levels of $112K, $113K, and $116K, and climbing to nearly $119K.
Cipolaro also mentioned that while the price surge has captivated investors, on-chain network activity tells a more nuanced story about the current market cycle and the evolving nature of Bitcoin’s user base.
Alongside this, a spike in short futures liquidations and the reawakening of a long-dormant whale have sparked intrigue and speculation across the crypto community.
Despite Bitcoin’s meteoric price rise, several on-chain metrics remain surprisingly muted compared to previous bull markets.
Transaction volumes are subdued, network fees are persistently low, and the mempool—the global queue of unconfirmed transactions—has dwindled.
Average block sizes, which neared the 4 MB limit during the 2023 Taproot inscription craze, have also declined.
At their peak, inscription-based transactions like Ordinals, BRC-20s, and Runes accounted for nearly half of block space.
Today, they represent less than 5%, reflecting a sharp drop in demand for block space.
This decline in on-chain activity might seem alarming at first glance, but it’s not necessarily a bearish signal.
Instead, it points to two structural developments: the post-Taproot inscription hangover and the increasing financialization of Bitcoin.
The frenzy around memecoins and NFTs in 2023 drove a surge in network activity, inflating mempool sizes and fees.
As that speculative fever has cooled, Bitcoin’s blockchain has returned to a quieter state, with fewer but larger transactions.
Moreover, the user base is shifting according to the report. Daily active addresses, a proxy for unique users, have remained flat or declined, breaking from the historical trend where address growth mirrored price surges.
This divergence suggests financial activity is moving off-chain, driven by the rise of spot ETFs and corporate treasury adoption.
These institutional players typically engage in infrequent, high-value transactions rather than the high-frequency, smaller transactions associated with retail users.
Transfer volumes, adjusted for unique entities, continue to rise, indicating growing participation from large holders like ETFs and corporate treasuries.
The recent price surge was accompanied by a significant wave of short futures liquidations, with $326 million in short positions wiped out on July 10, marking the third-largest single-day liquidation event in Bitcoin’s history.
This capitulation by short sellers, who were defensively positioned against the rally, added fuel to Bitcoin’s ascent past $116K.
The scale of these liquidations suggests the rally may have more room to run, as traders adjust their positions in response to breached key price levels.
Adding to the week’s excitement, 80,000 bitcoins—valued at over $8 billion—moved on-chain on July 4, originating from addresses dormant since 2011.
This “July 4th Whale” sparked rampant speculation, fueled by unusual activity in the days prior.
On July 2, messages embedded in the blockchain via OP_RETURN warned long-term holders that their wallets had been “seized” and directed them to a dubious website, salomonbros.com, claiming ownership of “abandoned” funds.
Some addresses also received cryptic messages referencing the TV show Lost (the numbers 4, 8, 15, 16, 23, 42), further stoking conspiracy theories.
Their analysis suggests these messages are likely part of a sophisticated phishing campaign.
The salomonbros.com website raises red flags: outdated content, misspelled names, inconsistent dates, and legally dubious claims about “abandoned” Bitcoin.
The Lost messages, sent from a separate address involved in low-quality transactions, appear unrelated and coincidental.
Blockchain data shows the whale’s transactions—moving 10,000 BTC and BCH to new addresses, followed by 70,000 BTC to SegWit addresses—demonstrate competence and confidence, with no evidence of compromised keys.
As noted in the update from NYDIG, the initial use of a legacy P2PKH address may be an anomaly, possibly user error, but the addresses share a funding history from 2011, suggesting a single, experienced actor.
Bitcoin’s rally to new highs underscores its growing financialization, with institutional players driving larger, less frequent transactions.
The decline in on-chain activity reflects both the fading of the 2023 inscription craze and a maturing market.
Meanwhile, the surge in short liquidations highlights the market’s momentum, while the July 4th Whale saga serves as a reminder to approach sensational claims with skepticism.
The simplest explanation—a phishing attempt targeting long-term holders—is likely the correct one.
As Bitcoin evolves, its network and user base are transforming, signaling a new phase in its journey.