Bitcoin active addresses ‘concern’ analyst despite 50% BTC price gains

Bitcoin (BTC) still lacks the on-chain volume growth and active address increases that are characteristic of bull markets, researchers warn.

In a candid assessment of BTC price recovery in 2023, analytics platform CryptoQuant warned that Bitcoin may be weaker than it looks.

Active addresses not copying the bull market paradigm

With on-chain metrics turning green and some even flashing bullish signals that haven’t been seen in years, many analysts are left with a healthy dose of suspicion.

Among them is CryptoQuant employee Yonsei_dent, who wrote this week in a blog post on the Quicktake platform that 2023 is not the same as previous bull markets.

He explains that the problem is active addresses, which are not increasing despite the fact that BTC/USD has gained almost 50% since the beginning of the year.

“Active Addresses is a metric that includes all addresses sending and receiving BTC and shows how active the market demand is,” the blog post reads.

The “price” of an asset is determined by the laws of supply and demand in the market. Cryptocurrency markets are no exception. For asset prices to rise, market interest and demand must be maintained.”

The attached chart shows the increase in the 30-day moving average (MA) of active addresses following the end of the 2018 bear market and the COVID-19 cross-market crash in March 2020. 2023, by contrast, has yet to show the same trend.

“You can see that the number of active addresses (30DMA) increased both during the bull market reversal in 2019 and after the shock caused by COVID-19 in 2020,” added Yonsei_dent.

“I am concerned that this 2023 rally did not show any growth in the number of active addresses.”

Annotated chart of active Bitcoin addresses (screenshot). Source: CryptoQuant

Lots of transactions, not a lot of volume

Another study this week draws similar conclusions about the Bitcoin investor habits that accompanied the return to $25,000.

Return to 20 thousand dollars? 5 things to know about Bitcoin this week

Analyst firm Glassnode notes that intranet volume remains low and both long-term holders (LTH) and short-term holders (STH) are reluctant to spend.

“Despite a net increase in network activity and ATH in total UTXOs, transfer volumes have declined markedly for both long-term and short-term holders,” reads the latest issue of the weekly newsletter.week online“.

Annotated graph of the volume of bitcoins spent by young coins (screenshot). Source: glassnode

However, there are some encouraging signs of an improvement in sentiment: the coins sent by LTH to exchanges are now mostly made at a profit.

In mid-January, 58% of the LTH coins sent to exchanges were moved at a loss, according to Glassnode, compared to just 21% earlier this week.

Relative long-term bitcoin holder realized a loss on a stock annotated chart (screenshot). Source: glassnode

The views, thoughts and opinions expressed here are those of the authors only and do not necessarily reflect or represent the views and opinions of Cryptooshala.

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