Bitrabo Editorial
Recent on-chain data reveals a significant increase in Bitcoin active addresses, indicating a surge in network activity that could potentially impact the market.
Bitcoin Active Addresses Spike Due to Market Volatility
The analytics firm Santiment reports a sharp increase in network utility. The term “active addresses” is used to describe the Bitcoin addresses that participate in transactions on the blockchain, as either recipients or senders.
The “daily active addresses” metric measures the total number of unique active addresses present on the network every day. Uniqueness reflects the metric’s practice of counting each active address only once, indicating that even if a wallet engages in numerous transactions within 24 hours, it would still only contribute one unit to the indicator.
Counting unique addresses is beneficial because unique addresses can be assumed to represent individual users. As a result, when the Daily Active Addresses indicator is high, it implies that a significant number of users are currently visiting the blockchain, signifying an active market. Conversely, low values of the metric indicate low activity levels on the network, reflecting weak investor interest in the coin.
The chart below shows the recent trend in daily active addresses for Bitcoin over the previous six months:
The indicator value shows recent upward movement | Source: Santiment on Twitter
As the chart displays, the Bitcoin active addresses metric has recently surged due to significant price volatility. This volatility increased as the US Securities and Exchange Commission (SEC) applied regulatory oversight to the industry’s largest exchanges, Binance and Coinbase.
As history indicates, the active addresses metric frequently spikes during periods of high volatility as such intense price fluctuations catch the attention of multiple investors. Users may engage in transactions during these periods for panic sells or FOMO dip purchases.
At the time of writing, the metric has not yet cooled down, as the number of active Bitcoin addresses has remained above one million for two consecutive days. This may imply that the latest volatilities have ignited renewed utility on the network, indicating a rise in transactional activity.
High network activity in Bitcoin may be positive in the long run, demonstrating user adoption and engagement. In the short term, however, it may cause further price volatility, as a plethora of users making multiple transfers may provide the necessary fuel for sudden asset price movements.
BTC Price Overview
Bitcoin’s current price hovers around $26,600, showing a drop of 1% over the preceding week.
Asset price seems stagnant post the volatility surge | Source: BTCUSD on TradingView
Image Credit: Dmitry Demidko on Unsplash.com, charts from TradingView.com, Santiment.net