When you drive past a deserted mall’s parking lot, you cannot immediately tell whether it’s a sign of widespread economic collapse or just proof that everyone shifted to shopping online. The same problem shows up when you look at Bitcoin‘s (BTC +0.54%) on-chain metrics.

The issue in question is the Bitcoin mempool, which can be roughly thought of as the holding area where bundles of transactions wait to be included in the next block, allowing them to be confirmed. And that queue has been so empty that it has been close to its usual bear market lows for most of 2025. This appears to be a significant red flag for demand, yet it may also be a reason to buy the dip, so let’s examine both sides of the story.

Image source: Getty Images.

A nearly empty mempool is a real warning sign

The mempool is essentially Bitcoin’s transaction waiting room. Nodes collect pending transactions and hold them there until miners add them to a block. A consistently crowded mempool and high fees are indicators that people are competing for scarce blockspace, which is bullish because it means the blockchain is being used a lot, which in turn implies plenty of demand for Bitcoin. In contrast, an unusually quiet mempool points to the opposite, with weaker transactional demand on the base layer.

Over the last year, the waiting room has gone from jam-packed to almost entirely vacant. The number of unconfirmed transactions in the mempool fell from roughly 287,000 in late December 2024 to around 3,000 in early February 2025, a one-year low that signaled sharply reduced activity. A few months later in May, the number of transactions in the mempool was still thin, with median fees dropping and many blocks going underfilled, a pattern almost never seen during the coin’s bull markets. By early July, the mempool was close to being empty, with approximately 10,000 to 15,000 pending transactions at times even as Bitcoin surged to new all-time highs, striking a sharp contrast with its earlier market cycles when price surges usually coincided with high mempool utilization.

Bitcoin

Today’s Change

(0.54%) $490.13

Current Price

$91134.00

Overlay that activity with the coin’s price, and things start to look concerning. In late February, Bitcoin had already fallen more than 20% below its mid-January high. Now, the mempool is marginally more in use — but still very underutilized compared to prior bullish periods. Taken together, a sleepy mempool and a choppy, highly correlated price path are consistent with a narrative where a lot of investors’ enthusiasm (and capital) has simply drained away.

And that’s the red flag. If demand for blockspace stays anemic while the macro picture remains highly uncertain, this drawdown could last longer and cut deeper than investors are expecting.

There’s no need to panic

The mempool story does not end with Bitcoin going to zero or losing most of its value. In practice, part of the mempool collapse reflects a structural change in how people hold the asset.

Bitcoin exchange-traded funds (ETFs) now hold roughly 1.3 million BTC out of its total possible supply of 21 million BTC, or approximately 6.2%, so a growing share of purchasing activity has migrated either into custodial products or to cheaper alternative chains. If more people now transact off-chain in their retirement or brokerage accounts, the mempool activity on the base layer will naturally look subdued, as it will genuinely experience a lower on-chain load.

Additionally, if prior patterns hold true, the mempool is already indicating that the worst phase of the recent downturn may be over, even if the price chart does not yet look encouraging. Additionally, there’s also the possibility that, when paired with the changes caused by the ETFs, the mempool may simply not be an indicator that matters much anymore (though I doubt it, as ETF issuers still need to buy and sell the asset directly to offer their ETFs).

So how should an investor respond? Assuming that Bitcoin continues to function as a long-term store of value, with a capped supply and ongoing adoption from financial institutions, buying the dip during periods of on-chain boredom is likely to yield decent results over the coming years.

In other words, the opportunity to buy more Bitcoin at a discount won’t last forever, even if it can continue to fall a fair bit from here, and it’s highly likely that the mempool will become cluttered again during the next upswing. If you’re highly averse to risk, it may be best to avoid buying and holding the coin right now. But if you can accept that your purchases probably won’t be underwater forever, now’s the time to be buying.