Data from Glassnode reveals a decline in the number of Bitcoin active addresses on the blockchain network. As Bitcoin struggles to break bullish, this news may mean further downside to the flagship cryptocurrency.
What You Should Know
• The seven-day moving average of Bitcoin active addresses fell to approximately 500,000, the lowest since April 2020, crashing over 60% in 6 weeks.
• The seven-day average of the daily transaction count has also dipped below 300,000 for the first time since March 2020.
• The count of Bitcoin active addresses contributed to the cryptocurrency to create new highs in the final quarter of 2020.
• The decline in the number of active addresses has seen Ethereum overtake Bitcoin, with the Ethereum network hosting roughly 200,000 more active wallets than Bitcoin.
• It is the third time this year Ethereum has overtaken Bitcoin by this metric. It happened on June 5 and June 6, 2021.
• Ethereum’s active addresses increased by more than 9% over the past week to stand at 700,000 active addresses, despite the price of ETH falling more than 10%. However, active Ethereum addresses are still down 22% from their early April peak of 900,000.
READ: Store of value: Why Ethereum could soon overtake Bitcoin
What they are saying
Charlie Morris, chief investment officer at ByteTree Asset Management stated, “The decline in active user participation is a sign of weak demand. The hype cycle is over for now and the market is unable to attract new entrants at the same pace.”
Twitter analyst, Mr. Whale also noted that Bitcoin’s active addresses have fallen to their lowest level since April 2020 based on a weekly moving average. He stated, “Bitcoin’s active addresses on the blockchain network just plunged to its lowest level since April 2020. This data is bearish. It shows demand for Bitcoin is drying up very quickly.”
What this means
The decline in the number of active addresses means that people are selling off their Bitcoin at a record pace. This indicates a bearish trend for Bitcoin in the short term and explains why the price of Bitcoin has been struggling to break above the $40,000 trading mark. The decline is also attributable to speculative investors taking a backseat in hopes of buying into the asset class at lower prices.
Bitcoin is currently trading at $33,000, down 0.88% at the time of writing this report.
Interested to see, how it plays out in the long run!