Over the last two months, Bitcoin's on-chain activity has neared historic lows as transaction volumes have reduced noticeably. This cooling off period comes after the all-time high of Bitcoin earlier in the year and is characterized by crowd fear and indecision rather than being a predictor of further price dips.

According to Santiment data, Bitcoin's on-chain transaction volume has dropped, hitting figures that were last seen years ago (since 2019). This pattern indicates that traders are reluctant to transfer their positions, possibly because of the market's volatility. The sharp decline in activity followed Bitcoin's all-time high in March 2024, a milestone that was one year ahead of the expected schedule according to historical halving cycles.

The sharp decline in the transaction volume has not escaped the attention of market analysts. Bitcoin tested the $60,000 support on May 10 after a very brief trip up to $63,500. Traders suggest that institutional players may be manipulating the market to prevent significant breakouts during weekends when the ETF market is closed.

Trader and analyst Rekt Capital highlighted that Bitcoin usually takes a hit weeks after a halving event, an interval he dubs the "danger zone." This phase of price dip, which is coming to an end now, showed a slump in the price of Bitcoin to $56,500. Nevertheless, long-term holders (LTH) are not selling their holdings, which might signify a possible recovery.

Bitcoin's price performance has been volatile, as the cryptocurrency has been unable to sustain its motion above $63,000. Bearish indications from stagflationary US economic data and hawkish remarks by Federal Reserve officials have also weakened the bullish sentiment. The University of Michigan Consumer Sentiment Survey revealed a significant drop from 77.2 in April to 67.4 in May, while inflation expectations rose, adding to the market's concerns.

Although the price of Bitcoin has fallen in recent months, the long-term Bitcoin holders are still positive. According to the data from CryptoQuant, these holders still did not sell their holdings after the top at $73,000. Axel Adler Jr, an on-chain analyst, noted that long-term holders had previously sold 1.3 million BTC at the peak but are currently retaining their assets, anticipating a local bottom. Such an act shows a strong faith in Bitcoin's long-term value as opposed to the actions of short-term holders, who have been seen to participate in a number of profit-taking events.