Bitcoin has been in a tight trading range since the start of February, struggling to break out of consolidation as buying and selling pressures remain low.

Recent on-chain data indicates that this sideways movement may continue due to a decrease in activity on the Bitcoin network.

The decline in network activity has been highlighted by CryptoQuant analyst Avocado_onchain, who warns of a prolonged consolidation phase similar to what was seen in March 2024 if the trend persists.

One key indicator is the decreasing number of daily active wallet addresses on the Bitcoin network, which has dropped by 2% since February 1 according to CryptoQuant's analysis.

This reduction in active addresses suggests a decrease in user demand, potentially leading to downward price pressure as lower network activity aligns with reduced buying interest.

Furthermore, the decline in the number of Unspent Transaction Outputs (UTXOs) on the network signifies decreased transaction activity as investors hold onto their coins rather than spending them.

While there are concerns of a potential investor exodus similar to the peak of the 2017 market cycle, Avocado notes that other indicators still point to a bullish outlook despite the decline in UTXOs.

Bitcoin is currently hovering near key support at $95,527, with the possibility of breaking below this level if network activity continues to weaken, potentially dropping to $92,325.

Alternatively, a shift in market trends and increased buying pressure could propel Bitcoin towards resistance at $99,031 and potentially reach $102,665 if successful.