Bitcoin Network Activity Drops Sharply, What's Going On?

Cryptocurrency markets are recovering from a price drop earlier this month, but Bitcoin's daily trading volume continues to decline. This unusual change in data reflects a change in how the flagship cryptocurrency is used. It may be a reflection of a larger trend.
Transaction volume drops sharply At the beginning of this year, as the price of Bitcoin rose, daily transaction activity began to grow steadily. The recovery of on-chain activity and mining activity also increased this number. However, as the price collapsed and the global economy fell into chaos, the number of transactions suddenly changed at the beginning of this month.

Bitcoin transaction volume, which exceeded 350,000 transactions per day several times earlier this year, is now around 270,000 per day and continues to decline. There are many reasons for this decline.
Lower prices have led to a reduction in miner activity, as evidenced by a notable drop in the Bitcoin network’s hash power over the past few days. Most notably, Bitcoin owners have withdrawn thousands of Bitcoins from exchanges, leading to a drop in trading activity.
The key takeaway from these moves is that Bitcoin investors are now more interested in keeping their funds safe in personal wallets rather than on exchanges.
From the data, it can be seen that storing Bitcoin in cold wallets means a decrease in network activity. Supporting this view is the fact that the number of Bitcoin wallets continues to grow steadily while solving the diversity problem. There are currently more than 100,000 more active addresses than at the beginning of March.
Safe Haven Ironically, the decline in network activity suggests that Bitcoin is healthy and safe. Investors moving their Bitcoin into wallets they control suggests the cryptocurrency is being viewed as a safe haven as the global economy faces stress.
Moreover, this move would help increase the value of Bitcoin by reducing the available transaction supply. In fact, Bitcoin supporters should worry about too many daily transactions, not too few.
Currently, the network can only handle about 600,000 transactions per day without incurring higher fees and network congestion issues. Until the Lightning Network or other scaling solutions become more user-friendly, the problem of too much activity is still very real.
As the market recovers, the number of Bitcoin transactions may pick up. Do you think the current decline in Bitcoin trading activity is a bearish or bullish signal? Feel free to leave a message to share your thoughts. (Toutiao)