Key Points
- Bitcoin’s active addresses have declined, indicating a decrease in network activity.
- This decline coincides with increased volatility and struggles in sustaining an uptrend.
Bitcoin, or BTC, has seen a 1.68% increase in the past 24 hours. However, the number of active addresses on the Bitcoin network has seen a decline. This suggests a weakening in network activity.
Bitcoin’s Struggles
Nearly a month ago, Bitcoin (BTC) reached a new high but has since found it difficult to maintain this momentum. In the past two weeks, BTC has been trading below $100k. This struggle is not only reflected in the price charts but also in the number of active users.
Crypto analyst Axel Adler has pointed out that the number of active addresses on the Bitcoin network has been falling. This decline occurred after BTC prices hit $107k a week ago. The number of active addresses has now dropped below the annual average, reaching a low of 1.1 million.
Implications of the Decline
This decline in active addresses is a cause for concern for Bitcoin. It suggests lower network activity with fewer investors actively participating. This reduced activity is also reflected in the drop in daily transaction volume from 402k to 350k over the past three weeks.
Historically, an increase in active addresses has been associated with bull markets. Conversely, a decline often precedes market corrections. This is especially true when combined with low daily transaction volumes and a rising NVT Ratio.
The decrease in active addresses has coincided with increased volatility for Bitcoin. As a result, Bitcoin has struggled to sustain an upward trend. This suggests that the decline in active addresses has impacted Bitcoin’s demand side.
If this low demand continues, institutions may sell to cover operational costs. This could result in further downward pressure on Bitcoin’s price. If the current trend continues, Bitcoin could decline to $94,992. However, if Bitcoin’s demand side recovers, the price may attempt $98,830.
