Cryptocurrency market analyst at Bloomberg Intelligence Jamie Coutts pointed out that there has been no notable growth in Bitcoin (BTC) active addresses during this bull cycle, indicating a stagnant trend over the past seven years.
He further noted that while this metric may have previously correlated with price, it could be losing its relevance as the Bitcoin network undergoes evolution. With expansions like Lightning Network, Ordinals non-fungible tokens (NFTs), and exchange-traded funds (ETFs), the utilization of Bitcoin’s blockspace is broadening.
Additionally, prospective Layer 2 scaling solutions and staking protocols are set to potentially reshape Bitcoin into the collateral of the digital and AI economy. These advancements are substantial, generating robust network effects that contribute to elevated valuations for the asset.
Nevertheless, it’s important to acknowledge that 760,000 active addresses represent a four-year low, matching the level last observed in March 2020 during the COVID-19 panic. These figures also stand 30% below the cryptocurrency’s all-time high.
“Furthermore, with the recent run up in Price/AA z-score reached an extreme +3.7 standard deviation,” the expert added. Jamie Coutts anticipates that the activity will stabilize at this level and then increase. He also outlined that the projection of active addresses exceeding 1.3 million during this cycle seems overly optimistic.
Unpopular Opinion: #Bitcoin's active addresses (AA) have failed to impress this cycle. In fact, there has been no real growth over the past 7 years. How concerning is this?Admittedly, this metric may be losing its correlation with price as the Bitcoin network evolves–Lightning,… pic.twitter.com/I9KSkFXcY4
— Jamie Coutts CMT (@Jamie1Coutts) May 10, 2024
Bitcoin Active Addresses Experience Surge During 2019 Bull Market And Post COVID-19 Shock In June 2020
Active addresses serve as a metric encompassing all addresses involved in sending and receiving BTC, offering insights into the level of active market demand. The value of an asset is dictated by the principles of supply and demand within the market. Cryptocurrency markets adhere to this as well. In order for asset prices to increase, they must be bolstered by sustained market interest and demand.
Historical data from CryptoQuant indicates that previously active addresses (30 DMA) experienced growth during both the 2019 bull market reversal and the recovery period following the 2020 COVID-19 shock.
As of the writing time, Bitcoin is priced at $63,183, marking a 2.86% increase over the past 24 hours, showing a notable recovery from losses observed yesterday. The cryptocurrency also recorded a trading volume of $24.783 billion in the same period, according to data from CoinMarketCap.
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