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 exchange. Stablecoins are rapidly gaining traction for payments, while BTC's relevance and utility continue to diminish, supporting a highly bearish long-term outlook. If 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 year. In 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 it. And since then, it is down 7.1%, while the S&P 500 is up 5.1%. This kind of fluctuation is not surprising. Even fans of cryptocurrencies like Bitcoin will agree that it is incredibly volatile. Seeing a 20% drop or a 20% gain in the span of a couple of months would not be unthinkable. So that in and of itself is not validation as to my stance. But looking at new data, as well as updated data from my last article, I remain confident that the long-term outlook for Bitcoin is disastrous. In fact, I view it as being very nearly worthless. And over the long run, I fully expect it to fall precipitously. Trading 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 approach. And when you do, most of the data points toward a very bearish situation. Case in point, we need only look at volume. In the chart below, you can see the volume as measured by both dollar amounts and the number of bitcoins traded, over the last several months. There has been a nasty decline in overall activity. Since peaking at $63.9 billion in November of last year, volumes have fallen to hit only $18.8 billion by the end of August. Author - 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 transacted. This 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 volume. This 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 cryptocurrency. In more traditional markets, this would be present in late-stage speculative rallies. In essence, eviction is high among holders. But 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 here. Author - Data from Glassnode Studio This is not the only problematic indicator. Once hailed as a sign of growing adoption, the number of active addresses associated with Bitcoin has now become a major problem. In 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 question. The table above illustrates how this has changed, with the most recent data coming from August of this year. So 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 2020. And 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 declined. Lower activity means that even as prices increase, those engaging in cryptocurrency are becoming less and less active. Author - 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 stocks. But the evidence there is mixed at best. Perhaps the most charitable metric to support this view is the fact that Bitcoin has become increasingly used in ETFs . As more ETFs roll out, this is, in fact, what's happening. But I don't view the data as favorably as other market participants. In the chart above, you can see the total value of cryptocurrency held in ETFs for every month from January of 2024 through the present moment. The 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 2024. It also happens to be 189.8% greater than the $52.12 billion worth of Bitcoin seen in October of last year. Author - Data from CoinMarketCap Even though the price of Bitcoin has risen, that alone is not enough to account for this increase in ETF balances. The chart above shows monthly inflows, on a net basis, of Bitcoin over the same time as the prior graph does. And while there have been some months of outflows, the overall trend has been toward additional inflows. Even 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 rise. In January of last year, it was only 3.4% of the total. And today, it stands at an all-time high of 7%. On its own, this is a bullish sign of greater adoption. But other data points show a much more complicated picture than this. Author - 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 transactions. An increase in this metric would indicate that more and more holders of Bitcoin are holding it for the long haul. But lately, that metric has been falling. Author - Data from Bitbo The chart above shows the 1-Year HODL Wave relative to the price of Bitcoin measured on a logarithmic scale. The relative decline that we are seeing is often interpreted as an indicator that Bitcoin is in a bullish phase. The 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 skyrocketing. Low volumes, like what we have already seen, helped to fuel that rally because there are more buyers than sellers. In short, this is all evidence of early investors exiting, and latecomers, lured in by the speculative flurry, put their own chips on the table. Proponents 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 article. But 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 ways. Bitcoin 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 cheaply. The underlying blockchain technology that makes Bitcoin possible is truly revolutionary. It has significant implications for financial markets and other aspects of society. But that is distinct from Bitcoin on its own. In the case of gold, it has become a store of value. And in recent months, as I have detailed in another article, it has done exceptionally well because of broader economic uncertainty. But the store of value that gold has become only happened after it demonstrated its utility. Even today, gold has significant utility. Although 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 fabrication. Another 7.1% was for use in technology. This 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 value. The Decline Of Real-World Use Bitcoin has become detached from its original use. Data in this space is actually incredibly difficult to come by. So we have to piece it together based on what is out there. The first place we should look is the Lightning Network . Because of real limitations to on-chain transactions, the Lightning Network was developed to serve as essentially a second layer that helps to facilitate transactions. Through 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 on-chain. Only the final balance is ultimately recorded on the blockchain. In essence, this is a mechanism aimed at bundling transactions. Author - Data from TheBlock This has, in the past, been used as a proxy for real-world payment activity. Even 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 increase. But in the chart above, you can see how, starting around late 2024, we started seeing a decline in it. For 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 standpoint. But it does serve as a single data point that gives us a clue of what is happening from a real end-use perspective. In short, it is proof that there is waning confidence in bitcoin's role as a medium of exchange. Federal Reserve We do have more concrete data that points toward a detachment from its original purpose. In fact, just last month, the Federal Reserve came out with its own analysis of how US consumers are using cryptocurrency for payments. According to them, in 2024, only 1.9% of US consumers used any cryptocurrency for payments. I know that the payment space is astronomically large. So I wouldn't expect it to account for a large portion. But if cryptocurrency was truly destined to succeed, I would expect its share of payment activity to grow over time. But it really hasn't. In fact, in 2022, 2.7% of US consumers used it for payments. And 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 to. They are essentially facilitating transactions using this method because it is the preference of the individual receiving them. The chart above shows that 35.4% of all cryptocurrency payments made last year were done so because the payee preferred it. That was up from 21.2% experienced just two years earlier. At 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 payments. They feel compelled to because of the desire of the person they are paying. Stablecoins 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 exchange. Those who are bullish about it will certainly disagree, and they do have some data to back their stance. For instance, only between 5% and 10% of US merchants actively accept cryptocurrency payments. But 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 Bitcoin. But I would interpret this in a very different way. The fact of the matter is that Bitcoin is poorly equipped to serve as a medium of exchange. Merchants often worry about their own profit margins above all else. And 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 significantly. This does not mean, however, that I'm bearish on all cryptocurrency. Visa In fact, recently, I have written favorably about stablecoin. The 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 payments. Visa Visa has actually come out with a lot of data regarding stablecoin activity. In 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 earlier. From 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 trillion. And 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 year. Visa Takeaway In my view, the future for stablecoin is bright. But for Bitcoin, it's bleak. The cryptocurrency is unlikely to ever achieve major adoption when it comes to merchant transactions. In fact, I expect it to become less relevant as time goes on. This means that all speculation around it is as a store of value, which, as I've detailed already, is becoming increasingly less convincing. Something only serves as a good store of value if it has utility. And Bitcoin fails on that front. The fact of the matter is that long-term holders are shrinking. Activity is falling. The number of active addresses continues to decline. And 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 ETFs. But 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 behave. At the end of the day, I don't see any reason to be anything other than incredibly bearish about Bitcoin. And while it is possible the price could surge in the near term, I fully believe that it will eventually plunge very close to $0.
