• Bitcoin active addresses measure the daily total amount of Bitcoin addresses that are participating in some transaction activity on the chain.
• The metric has seen some increase with the latest rally in the price of Bitcoin, but the rise has still not been too significant compared to previous cycles at a similar stage.
• An analyst noted that market activity rapidly changed after the bottom formed during the previous cycles.
What Are Active Addresses?
Bitcoin Active Addresses measure 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. This indicator also accounts for both senders and receivers in this measurement. When this value is high, it means a large number of users are making transactions on the network right now and when it is low, it implies not many users are engaging with cryptocurrency currently.
As pointed out by an analyst in a CryptoQuant post, market activity rapidly changed after the bottom formed during previous cycles. During bear markets, price is usually consolidating which leads to less interest from traders while volatile moves result in investors rushing to trade hence why active address metric can show elevated values at such times.
The chart below shows how Bitcoin active addresses have been trending over last few years:
Looks like value of metric hasn’t moved much recently | Source: CryptoQuant
Recently there has been some improvement registered in this indicator as well as some increase with recent rally in price of Bitcoin but rise has still not been too significant compared to previous cycles at similar stage.
A recent example of sudden activity return can be seen around time of FTX collapse where as soon as price began moving sideways again following crash active addresses also sunk down again.
Demand for Bitcoin has been returning recently however growth rate has been slower than what was seen at similar stages during earlier cycles as measured by active address metric which tracks daily amount of bitcoin addresses taking part in transaction activities on chain.