On-chain data shows that Bitcoin Active Addresses have seen a sharp decline lately, a sign that could be bearish for BTC.
Bitcoin active addresses recently saw their biggest decline since 2021
As noted by an analyst in a CryptoQuant Quicktake afterthe BTC Active addresses There has been a decline since March this year. An address is said to be ‘active’ when it participates in some transactional activity on the network, either as a sender or as a receiver.
The active addresses indicator tracks the unique total number of such addresses performing transfers on the Bitcoin blockchain every day. The unique active addresses can be considered the same as the unique users visiting the network, so the metric essentially tells us about BTC’s daily traffic.
Here is a chart showing the trend in the 100-day Simple Moving Average (SMA) of the Bitcoin Active Addresses over the past few years:
The value of the metric appears to have been going down in recent months | Source: CryptoQuant
As shown in the chart above, the 100-day SMA of Bitcoin Active Addresses had been rising throughout 2023 and the early parts of this year, but since March the metric has seen a sharp reversal, with the value now falling rapidly. . The reversal occurred around the time of BTC new all-time record (ATH)so it is likely that the decline in the indicator is happening due to the consolidation that the currency has been stuck in since then.
Investors find sharp price action like rallies exciting, while sideways moves are boring, so it’s not surprising that Active Addresses are recording a downturn during a time like now. What may be worth noting, however, is the magnitude of the decline that the metric’s 100-day SMA has seen. Its value is already below the 2022 bear market low and could soon fall below the 2021 low as well.
Bitcoin generally needs an active user base to keep any rally going, so the value of the indicator, which has recently witnessed a collapse, could be a bearish sign. “Don’t be surprised if the price of BTC starts catching up with the address activity trend very soon,” Quantity notes.
Although the trend of active addresses looked negative, Ki Young Ju, CEO of CryptoQuant, said in an X after that Bitcoin is still in the middle of the bull cycle.
Looks like the value of the metric has been positive in recent days | Source: @ki_young_ju on X
The above chart, shared by Young Ju, shows the trend in the Bitcoin Growth Rate Difference, an indicator that compares BTC market capitalization growth and realized capitalization.
The last of these, the realized roofis an on-chain capitalization model that basically tells us about the amount of capital that the investors as a whole have put into the cryptocurrency.
Currently the indicator is green, which means that the market capitalization is growing faster than the realized capitalization. “If the market capitalization is growing faster than the realized market capitalization, this could be a signal of a bull market; the reverse could indicate a bear market,” explains the CEO of CryptoQuant.
BTC price
Bitcoin has seen a continuation of its last plunge over the past day as the price has now fallen to the $62,700 level.
The price of the coin has seen a steep decline over the last couple of days | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com