A crucial Bitcoin activity metric is now reaching levels usually only observed after the asset’s price has already peaked, adding to the ongoing uncertainty around Bitcoin’s future price movements.
The number of Bitcoin (BTC) active addresses — representing the total number of active users on the network — has “declined significantly” since the beginning of 2024, a pattern that has historically formed after Bitcoin’s price peaked in the 2017 and 2021 bull cycles.
Avocado onchain said that if active addresses bounce back, Bitcoin’s price will likely follow. Source: CryptoQuant
CryptoQuant contributor “Avocado onchain” pointed out in a Sept. 3 research note that Bitcoin’s price hasn’t followed the typical downturn pattern seen in previous cycles. Instead, its price has been “moving sideways within a large range, showing no clear direction.”
Bitcoin traded at $56,666 at the time of publication, its lowest level since Aug. 16, according to CoinMarketCap data.
Avocado suggested that this signals a shift in Bitcoin holders’ mindset, with more choosing to hold long-term.
“The sharp decrease in wallet activity suggests that people stopped engaging in transactions and essentially “locked up” their wallets,” CryptoQuant stated.
Swyftx lead analyst Pav Hundal told Cointelegraph that “a large and increasing share of the market is being gobbled up by institutional cash, and these guys aren’t holding it in hot wallets.”
“Active address numbers have been in freefall since the ETFs launched in January. It’s possible that what we’re seeing right now is a slow decline in the relevance of wallet address movement data.” He added:
“Active address numbers have been in freefall since the ETFs launched in January. It’s possible that what we’re seeing right now is a slow decline in the relevance of wallet address movement data.”
Bitcoin advocate and network economist Timothy Peterson used the “completely anemic” metaphor to describe the significant decline in Bitcoin active addresses.
“Are people using ETFs now, or is there something else?” Peterson added.
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Crypto analysis firm 10x Research highlighted that despite many people expecting Bitcoin to follow a “predictable four-year cycle” following the April halving event, that isn’t always the case.
“Bitcoin’s market behavior is far more volatile, often skyrocketing into rapid, parabolic gains when demand shifts suddenly,” 10x Research wrote in a Sept. 3 X post.
Meanwhile, crypto analyst Will Clemente believes the years of Bitcoin’s “peak” compound annual growth are likely over, meaning investors may need to put in more upfront to see better returns.
“Bitcoin’s peak CAGR is probably behind us, but that doesn’t mean you can’t make up for it with position sizing,” Clemente added.
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