Bitcoin’s active address growth and lack of on-chain volume distinct from previous BTC price increases.
Research warns Bitcoin
The chain’s volume growth and positive addresses that characterize a bull market are still lacking.
Commenting on BTC’s price rebound in 2023, analytics platform CryptoQuant warned that Bitcoin may be weaker than it looks.
Active addresses that do not copy bull market patterns
Stock indexes turned green, even with a bullish signal not seen in years, with good skepticism remaining among many analysts.
Among them is Yonsei_dent, a contributor to CryptoQuant, who wrote in one of the platform’s blog posts this week that Quicktake doesn’t match the previous bull market of 2023.
He explained that the problem lies in active addresses, even though BTC/USD is up nearly 50% since the beginning of the year.
“Active Addresses is an indicator that includes all BTC sending and receiving addresses and shows you how active the market demand is,” the blog post said.
The “price” of an asset is determined by the laws of supply and demand in the market. The cryptocurrency market is no exception. “We need to support market interest and demand for asset price growth.”
The accompanying chart shows the 30-day moving average (MA) of active addresses after the 2018 bear market and the end of the March 2020 COVID-19 market crisis. In contrast, 2023 has yet to see the same trend.
“It can be seen that the number of active addresses (30 DMA) increased both during the 2019 bull market and during the recovery from the COVID-19 shock in 2020.” Yonsei_dent added.
“I’m afraid the 2023 party won’t have an increase in active addresses.”
Lots of business, little volume
Other studies have drawn similar conclusions about the behavior of Bitcoin investors returning to $25,000.
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Analytics firm Glassnode notes that blockchain volume remains low and long-term (LTH) and short-term (STH) holders are unwilling to spend.
“Despite the net increase in on-chain activity and ATH across all UTXOs, the volume of transfers for both long- and short-term holders is extremely low,” notes the latest issue of On-Chain Weekly.
There are some encouraging signs of improving sentiment, with funds sent to exchanges through LTH currently benefiting most.
According to Glassnode, in mid-January, 58% of LTH sent to the exchange were transferred at a loss, compared to just 21% earlier this week.