On-chain data shows that the metric of active Bitcoin addresses has fallen to very low levels recently. Here’s what that could mean for the asset’s price.
Active Bitcoin addresses over the 30-day average are now down to just 1 million
As CryptoQuant author Axel Adler Jr. explains in a new article, mail In X, the Active BTC Addresses indicator has been on the decline lately. This metric, as the name suggests, measures the total number of addresses that engage in some type of transaction activity on the Bitcoin blockchain each day.
The unique number of active addresses can be considered the same as the unique number of users interacting with the network, so the value of this indicator can tell us how much traffic BTC is currently handling.
When the metric is rising, it means that the number of users using the network is increasing. This trend indicates that blockchain technology is currently attracting attention. On the other hand, a declining metric indicates that investor interest in the cryptocurrency may be decreasing as the number of users transacting decreases.
Now, here is a chart showing the trend in the 30-day and 365-day moving averages of active Bitcoin addresses over the past few years:
The value of the metric appears to have been on the decline in recent months | Source: @AxelAdlerJr on X
As you can see in the chart above, the 30-day moving average of active Bitcoin addresses has been declining over the past year. The indicator temporarily deviated from this downtrend as prices surged towards an all-time high (ATH), but resumed its work as the asset descended into consolidation.
Investors find sharp price movements like rallies interesting, so it’s no surprise that the rallies that occurred earlier in the year quickly attracted a lot of attention. However, the dull price movements that followed caused users to lose interest just as quickly.
Shortly after the 30-day active MA resumed its downward trajectory, it saw its value drop below the 365-day moving average, and since then, the two lines have maintained this arrangement.
This suggests that Bitcoin’s recent monthly activity has been below average over the past year. In fact, at its current value of around 1 million, the 30-day moving average of active addresses is at a similar level to that seen in July 2021.
July 2021 Recession This came after China banned Bitcoin mining, which negatively impacted the price of the cryptocurrency. However, active addresses did not remain at these low levels for long, as the network came back to life, and the rally was witnessed Second wave
Historically, any sustained movement in the asset has required a surge in active addresses, with new users coming in to provide the fuel needed to keep such runs going. As such, until active addresses can recover, Bitcoin may not be able to see another sustained rally now either.
Bitcoin price
Bitcoin recovered to break above $58,000 earlier today, but the asset appears to have slipped again as it is now trading at $57,700.
Looks like the price of the coin has been going up over the last few days | Source: BTCUSDT on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com