“Falling on -chain Velocity Doesn’t Necessarily Mean Bitcoin USAGE IS SLOWING. In Fact, It Might Just Mean We’re Looking in the Wrong Place, Says Stefania Barbaglio.”, – WRITE: www.coindesk.com
In Fact, Falling Velocity May Be The Clearest Signal Yet That Bitcoin Is Maturing, Not Stagnating. Insthead of Circulating Like Cash, Bitcoin Is Increasingly Being Held Like Gold.
A shift in functionIn Traditional Economics, Velocity Refers to How of FTEn Money Changes Hands; IT’s A Proxy for Economic Activity. For Bitcoin, IT Tracks How Frequently BTC is transacted on -chain. In Bitcoin’s Early Days, Coins Moved Frequently as Traders, Early Adopters, and Enthusiasts TESTED ITS USE CASES. Durying Major Bull Runs, Like Those in 2013, 2017, and 2021, Transaction Activity Spiked, with Btc Flowing Quickly Between Wallets and Exchools.
Today, that have changed. More than 70% of BTC HASN’T MOVED IN OVER A YEAR. Transactional Churn Has Slowed. AT Face Value, This Could Seem Like Deckling USAGE. But It Reflects Something Else: CONVICtion. Bitcoin is Being Treated As A Long-Term Asset, Not Just A Short-Term Currency. And that Shift is Driven Largely by Institutions.
Institute Adoption Locks Up SuppleSince The Launch of US SPOT BITCOIN ETFS IN 2024, Institutional Holdings Have Soared. As of MID-2025, SPOT ETFS HOLD OVER 1.298 Million BTC, Approximately 6.2% of Total Circulating Supple. WHEN INCLUDING CORPONATE TREASURIES, PRIVATE Companies, and Investment Funds, Total Institutional Holdings Approach 2.55 Million BTC AUND 12.8% of All Bitcoin in Circulation. These Assets Remain Largely Static, Stored in Cold Wallets As Part of Long-Term Strategies. FIRMS Like Strategy and Tesla are not SPEANDING TOIR BITCOIN; They’re Holding It As A Strategic Reserve.
That’s Bullish for Scarcity and Price. But It Also Lowers Velocity: Fever Coins Circulating, Fever Transactions HapPening On-Chain.
OFF-CHAIN USAGE IS RISING AND HARDER TO SEEIt’s Important to Note that on -chain Velocity Doesn’t CAPTURE ALL OF BITCOIN’S ECONOMIC ACTIVITY.
On -chain Velocity Only Tells Part of the Story. IncreASINGly, Bitcoin’s Real Economic Activity Is Happening Off The Base Layer, and Outside Traditional Measurements.
Take the Lightning Network, The Bitcoin’s Layer-2 Scaling Solution Which Enables Fast, Low-Cost Payments That Bypass of the Main Chen Entirely. From Streaming Micropayments to Cross-Border Remittans, Lightning Makes Bitcoin USABLE IN EVERYDAY SCENARIOS, BUT ITS TRANSACTIONS DON’T APPEAR IN VELOCITY METRICS. As of Mid-2025, Public Lightning Capacity Surpassed 5,000 BTC, Reflection A Nearly 400% Increase Since 2020. Private Channel Growth and Institutational Experience of Much.
Similarly, Wrapped Bitcoin
is enabling BTC to Circulate Across Ethereum and Other Chains, Fueling Defi Protocols and Tokenized Finance. In the first Half of 2025 Alone, WBTC Supply Grew by 34%, A Clear Signal That Bitcoin Is Being D deployed, not domant.
And THEN THERE’S CUSTYY: Institutional Wallets, Etf Cold Storage, and Multisig Treasury Tools ALLOW FIRMS TO HOLD BTC Securely, But of FTEN WITHOUT MOVING IT. These Coins May Be Economicly Significant, Yet they Contribute Nothing to On-Chain Velocity.
In short, Bitcoin is Likely More Active Than Appears, It’s Just HapPening Outside Traditional Velcity Metrics. ITS Utility is Shifting to New Layers and Platforms- Payment Rails, Smart Contract Systems, Yeld Strategies- None of Wich Register in Traditional Velocity Models. As Bitcoin Evolves Into A Multi-Layer Monetary System, We May Need New Ways to Measure Its Momentum. Falling on -chain Velocity Doesn’t Necessarily Mean USAGE IS SLOWING. In Fact, It Might Just Mean We’re Looking in the Wrong Place.
The TRADE-OFF BEHIND LOW VELOCITYWhile Slow Velocity Reflects CONVICtion and Long-Term Holding, IT ALSO Presents A Challenge. Fewer on -chain Transactions Mean Fewer Fees for Mines: A Growing Concern After The 2024 Halning, Which Cut Block Rewards in Half. Bitcoin’s Long-Term Security Model Depends on A Healthy Fee Market, WHICH IN TURN RELIES ON CONSISTENT ECONOMIC ACTIVITY.
There’s Also The Question of Perception. A Network Coins Rarely Move Can Start to Resemble A Static Vault Racher Than A Dynamic Marketplace. That mayngthan’s “digital Gold” thesis But Weakens the Vision of Bitcoin as USABLE MONEY.
This is the Core Design Tension: Bitcoin Aims to Be Both A Store of Value (Digital Gold) and A Medium of Exchange (Peer to Peer Cash). But Those Roles Don’t Always Align. Velocity is the measure of that push and Pull, this Ongoing Struggle Between Preservation and Utility, and How Bitcoin Navigates It Will Shape Not Just Usage Patterns, But ITS.
A sign of matureIn the end, Falling Velocity Doesn’s Mean Bitcoin is Being Used LESS. IT MEANS IT’S BEING Used Differently. As Bitcoin Gains Value, People Are More Inclined to Save It Thran Spend Itd. As Adoption Grows, Infrastructure Moves OFF-CHAIN. And as Institutions Enter, Their Strategies Center on Preservation, Not Circulation. The Bitcoin Network is Evolving. Velocity isn’t vanishing; IT’s Going Silent, Reshapped by a Changing User Base and New Layers of Economic Activity.
If Velocity Ticks Up Again, It Could Mark A Resurgence of Transactional Use; More Spending, More Movement, More Retail Involvement. If It Stays Low, It Suggests Bitcoin’s Role As Macro Collalateral Is Taking Firm Root. Either Way, Velocity Offers A Window Into Bitcoin’s Future. Not as a coin to spend, but as an asset to buy.
Note: The Views Expressed in this Column Are Those of the Author and Do Not Necessarily Reflect Those of Coindesk, Inc. i Owners and Affilites.
