Bitrabo Editorial
Bitcoin is facing downward pressure, struggling to recover from losses earlier this week. Despite some stability in prices over the last day, the prevailing trend still points south. To shift this trend, a convincing close above the local resistance around $66,000 is needed.
Decrease in Bitcoin Active Addresses
Recent data indicates a concerning decline in on-chain activity as Bitcoin prices stabilize and consolidate within a bearish breakout pattern. An analyst highlighted that the number of active Bitcoin addresses has been dropping over the past few months, except for a temporary increase from late 2023 to early 2024. During this period of rising active addresses, Bitcoin prices surged from below $30,000 to a high of $73,800. However, since then, active addresses have been decreasing.
A slowdown in network activity, as seen currently, can have significant implications on price movements. Typically, the number of active addresses increases alongside rising prices, but with the current decline in transfers from unique addresses, it suggests waning interest from users.
Are Spot Bitcoin ETFs the Culprit?
The analyst speculates that the approval of spot Bitcoin ETFs by the SEC may have contributed to this decline in activity. The introduction of these ETFs allowed institutions to invest in Bitcoin, leading to a shift in ownership dynamics. Instead of retail investors driving prices as in previous cycles, institutional investors now hold significant control over price movements due to their substantial market influence.
In the past, price movements were influenced by numerous small addresses, but now the actions of large institutional investors have a more pronounced impact. This shift could be contributing to the current decrease in on-chain activity compared to previous periods.
If this trend continues and BTC breaches key support levels, activity may further decline as both institutions and retail investors withdraw from the market. Additionally, the recent movements of coins by long-term holders could exacerbate the situation.
Another analyst highlighted significant movements of Bitcoin holdings, indicating a shift in market activity. For instance, on August 27, 75,228 BTC aged between three to six months were transferred, followed by 1,614 BTC aged between 18 months and two years on August 28.