As prices in the crypto market continue to decline in the short term, several metrics show some level of disinterest in the Bitcoin network. Recently highlighted by leading analytic firm CryptoQuant, one such metric is the massive reduction in the total number of active addresses on the network. While this feeling of disinterest could lead to bitcoin (BTC) price reaching new lows, the significant drop in BTC transactions and price presents an opportunity for accumulation for some investors. Is BTC price yet to complete correction?
Active addresses on the Bitcoin network dropped 30% in 180 days.
According to a Thursday report by CryptoQuant, active addresses on the Bitcoin network have been declining since January 2024. By implication, fewer BTC transactions have been recorded in recent months with the overall activity on the network counting low.
As of March 2024, data shows that the total number of daily active addresses on the Bitcoin network was about 1.2 million. At that time, BTC price rallied massively, setting an all-time high above $73,000.
However, BTC price began losing upward momentum in late March and has been ranging between $71,000–$50,000 since then. As a result of this multi-month sideways price action, daily active addresses on the network dropped to 744,000 in late August 2024. This marked the lowest single-day active addresses on the Bitcoin network since 2021, according to CryptoQuant.
“The total number of active addresses on the Bitcoin network hit new lows in 2024, reaching the same level as 3 years ago, when the price of BTC was quoted at around $45,000,” the report stated.
In September, BTC active addresses increased mildly, reaching 838,000 at the time of writing. This translates to a decrease of over 30% in the overall active addresses on the network in 6 months.
Read also: Negative sentiments by new market participants behind bitcoin’s bearish phase- Bitfinex Alpha
What does the decline in BTC active addresses imply?
Reacting to the declining number of active addresses, CryptoQuant analyst Gaah submitted that market participants seem to have “less interest in using the Bitcoin network at this point in the market.”
Attributing this outcome to the multi-month sideways BTC price action, he wrote that “this feeling of disinterest could have a negative influence on the price of BTC, coinciding with indicators of low trading volume.”
Read also: Bitcoin hovers around $60K as U.S. spot bitcoin ETFs record biggest daily outflow in 3 months.
On the other hand, Gaah noted that “less activity on the network generally means less volatility, which can lead to periods of price stability.” Accordingly, he stated that the drop in active addresses and price could serve as a buying opportunity for some investors.
Puell Multiple, a metric that compares the value of daily mined BTC to its 365-day moving average to identify relative buy-and-sell zones, also indicates buy opportunity for BTC investors. According to CryptoQuant, Puell answers the question, “If all mined bitcoins were sold immediately in the market, how profitable mining pools are compared to last historical year?” At the time of writing, the technical indicator is neither calling a BTC top nor bottom but gradually approaching its green long-term “buy” zone characterized by a reading of 0.5 or less.
Trading at $54,140 at press time, BTC is down over 8% in the past seven days. While investors hope for a rebound to happen anytime soon, a chart shared by the pseudonymous creator of the onchain analytics platform Checkonchain suggests otherwise. The chart indicates room for more correction as BTC price has yet to post the magnitude of correction recorded in past bull market cycles.
Read also: Why the Crypto Market is Crashing: Key Factors Explained
Ndianabasi Tom A crypto journalist and content writer who has been talking about cryptocurrency and blockchain technology since 2018, Ndianabasi is a Writer at Crypto Asset Buyer (CAB).
