Bitrabo Editorial
Recent on-chain metrics indicate a significant decrease in Bitcoin Active Addresses, which could be a negative signal for BTC.
Bitcoin Active Addresses Experience Significant Decline Since 2021
An analyst highlighted in a CryptoQuant Quicktake article that the number of BTC Active Addresses has been on a downtrend since March. An address is termed “active” when it engages in transactions, whether sending or receiving Bitcoin.
The Active Addresses metric tracks the total number of distinct addresses engaging in transfers on the Bitcoin blockchain each day. This effectively reflects the unique users interacting with the network, providing insight into BTC’s daily engagement.
The following chart depicts the trend of the 100-day Simple Moving Average (SMA) for Bitcoin Active Addresses over recent years:
The chart reveals that the 100-day SMA for Bitcoin Active Addresses was on the rise in 2023 and early this year. However, since March, this metric has sharply declined, coinciding with BTC’s recent all-time high (ATH). This decline likely reflects a period of price consolidation post-ATH.
Investors typically find significant price movements thrilling while perceiving a sideways market as dull, making the current reduction in Active Addresses somewhat expected. However, the substantial drop in the 100-day SMA is noteworthy, dipping below figures seen during the 2022 bear market and threatening to reach levels not seen since 2021.
For Bitcoin to maintain a price rally, an active user base is crucial. The recent plummet in the Active Address indicator may signal bearish trends ahead. “Don’t be surprised if BTC’s price aligns with the address activity trend shortly,” remarked the analyst.
Despite the unfavorable trend in Active Addresses, CryptoQuant’s CEO, Ki Young Ju, stated on X platform, that Bitcoin remains within a bull cycle.
The chart from Young Ju illustrates the Bitcoin Growth Rate Difference, which compares the growth rates of Bitcoin’s market cap and realized cap.
The realized cap is an on-chain metric that assesses the total capital invested by all Bitcoin holders. Currently, the Growth Rate Difference reflects a favorable trend, indicating that the market cap is expanding more rapidly than the realized cap. “A faster-growing market cap suggests a bull market, whereas the opposite may indicate bearish conditions,” explains the CryptoQuant CEO.
BTC Price Update
Bitcoin has continued its downward trend over the past day, with its price now resting at approximately $62,700.