• Bitcoin active addresses have not grown much recently, suggesting a low demand for the asset.
• An analyst pointed out that market activity rapidly changed after the bottom formed during the previous cycles.
• A chart shows that the Bitcoin active addresses had come down to a relatively low value during the bear market, but have seen some improvement recently.
Bitcoin Active Addresses Show Low Demand
On-chain data shows demand for Bitcoin has been returning recently, but the rise has been slower than what previous cycles saw at a similar stage.
Understanding Active Addresses
As pointed out by an analyst in a CryptoQuant post, the market activity rapidly changed after the bottom formed during the previous cycles. The relevant indicator here is the “active addresses,” which measures the daily total amount of Bitcoin addresses that are participating in some transaction activity on the chain.
The metric only measures unique addresses, meaning that if an address takes part in multiple transfers in a single day, it’s still counted only once. The indicator also accounts for both senders and receivers in this measurement. When the value of this metric is high, it means a large number of addresses are making transactions on the network right now. Such a trend suggests that the cryptocurrency is actively attracting users to trade on the chain currently. On the other hand, low values imply not many users are making transfers on the blockchain at the moment. This kind of trend can suggest that demand for the asset is low currently.
Recent Market Activity
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As shown in this graph, while there was an increase with recent rally in price of Bitcoin, growth has still not been too significant yet when compared to earlier cycles at same stage of development. In bear markets usually investors stay away from crypto as there isn’t much volatility and hence low trading activity can be observed on blockchain network as well as indicated by these metrics with decreasing values during such times.. However when volatility surges suddenly , more investors tend to join and hence resulting into surge in trading activities which can be observed through higher values of active address metrics . An example of this kind of sudden surge could be seen around time period when FTX collapse happened .
Overall , it looks like although progress is being made , yet crypto assets haven’t attracted enough traders back yet and hence active address metrics show comparatively lower values than expected which implies lower demand currently . Although current situation might not look positive , however its important to remember that crypto markets work differently than traditional stock markets and hence such trends don’t necessarily last long periods so one should wait and watch how things develop over next few weeks or months before coming into any conclusion about current state or future prospects related to cryptocurrencies .