Bitcoin Transaction Activity Plummets Midmonth: What's Behind the Dramatic Shift?

On-chain analyst Murphy (@Murphychen888) has uncovered a striking pattern in Bitcoin network activity that raises questions about market participation during the year-end transition. The average value per single transaction on the Bitcoin blockchain experienced a dramatic reversal between mid-December and late December, declining from $46,610 to just $24,897—representing a near-total halving of transaction sizes across the period.

The Numbers Tell a Story

What makes this midmonth decline particularly noteworthy is that it occurred despite Bitcoin maintaining a relatively stable price corridor. Throughout the same window, BTC held firm between $87,000 and $88,000, suggesting that price stability masked significant shifts in underlying trading dynamics. This disconnect between price stability and transaction volume compression points to a deeper issue: reduced participation from major market players.

The Bitcoin holdings concentration metric reinforces this observation. From December 25 through December 30, the concentration of holdings remained virtually flat at 14.4%, indicating that large holders neither accumulated nor distributed significantly during this period. This lack of movement among whales during typically volatile year-end trading is itself revealing.

Holiday Markets and Liquidity Drains

Murphy’s analysis attributes this phenomenon largely to the seasonality of year-end market dynamics. With U.S. institutional investors observing holiday periods, overall market participation contracted noticeably. This seasonal liquidity reduction—common during midmonth transitions into holiday weeks—naturally compresses trading volumes and reduces the average transaction size as retail and medium-sized players take a backseat.

What Comes Next?

The analyst outlined two probable scenarios as market liquidity gradually recovers from its midmonth lows:

Scenario One: The concentration of Bitcoin holdings continues its gradual climb until it reaches a critical threshold, at which point large holders execute significant distribution, triggering a sharp drop in concentration metrics.

Scenario Two: The concentration simply reverses course and declines significantly without building up first, suggesting more gradual unwinding rather than a sudden shock event.

Both paths carry implications for price action and market structure as we move past the midmonth transition into more normalized trading conditions. The key takeaway: today’s transaction compression may represent nothing more than a temporary market feature rather than a fundamental shift in appetite.