According to analytics platform Santiment, XRP continues to see its network grow with more wallets. The same applies to Ethereum, the second most popular blockchain network.
However, this is not the case for Bitcoin. In fact, it now has 277,240 fewer nonempty wallets compared to three weeks ago.
Bitcoin's declining fundamentals
Chris Kuiper, director of research at Fidelity's crypto arm, attributed a recent sharp decline in Bitcoin's on-chain activity to the growing influence of Bitcoin exchange-traded funds (ETFs).
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According to Kuiper, a lot of activity that previously had to happen on-chain to move Bitcoin between various parties can now happen off-chain given that ETFs can net transactions out. This is also the key reason why Bitcoin's mempool remains basically empty.
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Notably, Fidelity does not think that this is "necessarily a bad thing" for the health of the Bitcoin network.
Silver lining?
This most recent decline recorded by Santiment has been attributed to smaller players dropping out of the market.
"Historically, these declines in retail belief are a positive sign for mid to long-term price performances," the firm said.
Whales and sharks typically tend to accumulate coins dropped by smaller players, subsequently driving up market prices.
Failing to reclaim $100,000
Bitcoin is stuck below the $100,000 level, currently trading at $96,008, according to CoinGecko data. The top cryptocurrency recently dipped due to underwhelming U.S. inflation data.
The anemic price action has been accompanied by the underperformance of Bitcoin ETFs. On Wednesday, these products logged a total of $251 million worth of outflows.
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