Data from CryptoQuant reveals that the number of active addresses on the Bitcoin network has been steadily decreasing since March. This decline in activity may reflect a change in market sentiment and could suggest potential challenges for Bitcoin. Let’s see what this trend means and whether there’s more to the story, could it possibly be misleading in the light of current events?
Why Are Active Addresses Important?
Active addresses give us a sense of how much engagement there is with Bitcoin—whether people are trading, transferring, or simply using it. Since March, the number of active addresses has been on a steady decline, which CryptoQuant describes as a “seriously negative signal.” Fewer active addresses usually suggest declining interest, which could eventually impact the price.
How Bad Is This Decline?
This decline in active addresses is the biggest since 2021, and unless things turn around soon, it may drop below 650,000—the levels we saw during the 2018 bear market. Now, this might seem worrisome, but there’s more to consider. When we look at current patterns, economic events, and historical data, they seem to point in the opposite direction—that we might actually be on the verge of a breakout.
How can we explain this? Well, part of it comes down to who’s making the moves. Large players like Bitcoin ETFs and whales are driving most of the action right now, while retail investors might not be as active. This current picture could be considered bullish if you think about what happens when retail attention finally starts picking up again. Something that the CEO of CryptoQuant is hinting at in his latest post on X where he is pointing out that currently this bull cycle is run by ‘new whales’ as he calls it, the ETFs for example. The next phase in this bull cycle, will be when retail comes in, and the cherry on top will be when the old whales start getting involved.
#Bitcoin Market Cycle
1. Old whales → New whales (Current stage)
2. New whales → Retail investors
3. Retail investors → Old whales— Ki Young Ju (@ki_young_ju) October 1, 2024
Also, it’s worth noting that active address numbers could be misleading. Many who entered during the peak of 2021 or during 2023 may have opened multiple wallets initially to test the waters but eventually decided to stick with just one. So, while the declining number of addresses seems bearish, it might just be reflecting a more consolidated base of users rather than a drop in interest.
At time of writing Bitcoin is trading around the $64,000 level, trying to break through once again.
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