Bitcoin Active Addresses Stay Low, A Hint That Demand Isn’t There Yet
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Data from the chain shows that the number of active Bitcoin addresses has remained at a low value for some time, suggesting that there is not much demand for the crypto at the moment.
Bitcoin active addresses have continued to move sideways recently
As noted by an analyst in CryptoQuant, activity on the BTC network has been low for the past few days, which means there is not enough demand for a bull rally yet.
“Number of Active Addresses” is an indicator that measures the total number of addresses on the Bitcoin blockchain that have engaged in some activity, be it sending or receiving.
A high value for this metric means that the network is currently monitoring a lot of activity. Such a trend shows that general interest in crypto is currently high among traders.
On the other hand, low values of the indicator may indicate that the chain does not have much trade at the moment.
Here is a chart showing the trend of Bitcoin active addresses over the past few years:
Looks like the value of the metric has been quite stagnant in recent months | Source: CryptoQuant
As you can see in the chart above, the quantum of the message has highlighted the relevant trend periods of active Bitcoin addresses.
Historically, bear markets have seen low and stagnant values in the indicator. The reason for this is that large price drops tend to scare off new entrants and short-term traders from crypto, which shuts down the network.
In the periods leading up to the bull run, the market has usually seen a gradual accumulation of active addresses, eventually peaking alongside the price. Such an uptrend signals the growing demand for Bitcoin among all types of traders.
Recently, the gauge has been stuck sideways as crypto has been in the middle of a bear market. However, there have been no signs of an increase in the number of active addresses yet.
The analyst explains that this recent low demand suggests that BTC has still not built a solid structure for a long-term sustainable rally that could lead to another bull market.
At the time of writing, Bitcoin is hovering around $18.8,000, up 1% from last week. Over the past month, the crypto has lost 12 percent of its value.
The chart below shows the BTC price trend over the past five days.
Looks like the value of the crypto hasn't shown much movement during the last few days | Source: BTCUSD on TradingView
Featured image from Hans-Jurgen Mager on Unsplash.com, charts from TradingView.com, CryptoQuant.com