On-chain data shows that Bitcoin Active Addresses have continued to see significant declines recently, a potentially bearish sign for BTC.
Active Bitcoin Addresses Recently Saw Their Biggest Drop Since 2021
As indicated by an analyst in a CryptoQuant Quicktake post, BTC Active Addresses have seen a decline since March of this year. An address is said to be “active” if it participates in some type of activity on the network, either as a sender or receiver.
The Active Addresses Index tracks the total number of unique addresses that transfer money to the Bitcoin blockchain every day. Different active addresses can be considered as different users visiting the network, so the metric tells us about the daily traffic of BTC.
Now, here is a chart showing the trend in the 100-day Simple Moving Average (SMA) of active Bitcoin 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 graph above, the 100-day SMA of Bitcoin Active Address has been rising in 2023 and in the early parts of this year, but since March, the metric has seen significant volatility, and its value is now falling rapidly instead. . The reversal happened at the time of BTC’s new all-time high (ATH), so it is possible that the decline in the index happened because of the consolidation the coin has been stuck on.
Investors find sharp price action like rallies exciting, while sideways movements are boring, so Active Addresses registering a decline in the current period is not very unusual. What may be noteworthy, however, is the scale of the decline seen by the metric’s 100-day SMA. Its value is already below the low point seen in the 2022 bear market and may soon fall to the 2021 low.
Bitcoin generally requires an active user base to sustain any rally, so the index value witnessing a recent fall would be a bearish sign. “You shouldn’t be surprised if the price of BTC starts to match the direction of the activity of the address in the near future,” notes the value.
Although the trend in Active Addresses looked negative, CryptoQuant CEO Ki Young Ju said in an X post that Bitcoin is still in the middle of a 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 of the Bitcoin Growth Rate Difference, which is an indicator that compares the growth of the BTC market cap and the realized cap.
The last of these, the realized cap, is an on-chain capitalization model that basically tells us the amount of money investors have put into the cryptocurrency.
Currently, the indicator is green, which means that the total market is growing faster than the visible limit. “When the market grows faster than the visible limit, it may indicate a bull market; the opposite can indicate a bear market,” explains the CryptoQuant CEO.
BTC price
Bitcoin has seen a continuation of its recent decline over the past day as its price has now dropped 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