The Active Bitcoin Address Rate Drops to a 13-Year Low!

The cryptosphere is in turmoil: Bitcoin records a historic drop in its active address rate. Not seen in more than ten years, this decrease raises questions about investor engagement and market dynamics. Why are transactions decreasing, and what are the implications of this trend for the future of the world’s most famous crypto?

A historic drop in the active bitcoin address rate

The ratio of active bitcoin addresses fell to only 1.22% for the month of June. This is the lowest level since November 2010, indicating a notable reduction in buying and selling activities among bitcoin holders. The week of May 27 recorded only 614,770 active addresses, a figure that had not been this low since December 2018.

This decrease in the number of active bitcoin addresses indicates consolidation, with less frequent transactions. However, 85% of bitcoin holders are currently making profits at the current price, which could discourage new buyers due to a potentially limited upside. Additionally, the concentration by large holders is at 12%, indicating relatively decentralized ownership and reducing price manipulation risks.

Furthermore, 70% of bitcoin holders have been holding their assets for over a year, showing strong confidence in the future of crypto. However, the presence of 25% medium-term holders and 5% short-term holders suggests some liquidity and recent buying activity.

Bitcoin's active address ratio hits lowest since 2010, signaling reduced trading activity and market consolidation among holders.#Bitcoin #cryptocurrencynews #bitcoinhalving2024 pic.twitter.com/9pIxUNhTTS

— Rahul (@Rahul176894) June 28, 2024

Bulls vs. Bears: an indecisive market

The crypto market is currently witnessing a standoff between bulls and bears. The sentiment index between the two camps has historically been more optimistic, but this gap is narrowing, indicating growing caution or even pessimism among traders. This evolution could be related to low address activity, a sign of a lack of user engagement or new investments in bitcoin.

Technical analysis, using notably the Ichimoku cloud and RSI divergence indicator, shows a potential bullish trend. The price of bitcoin is slightly above the Ichimoku cloud, a typically bullish signal. The RSI indicator, currently around 10, signals a major divergence with relatively high momentum compared to the average, which could point to a bullish trend if the RSI moves above the median line of 50.

However, the network value to transaction (NVT) ratio shows volatility and a general downward trend in usage compared to network valuation, suggesting that the current price levels are not sustainably supported by actual transactional usage.

The drop in the active bitcoin address ratio to levels unseen since 2010 reflects a phase of market consolidation. Despite positive technical signals, investor caution and market volatility make predictions uncertain. Bitcoin holders will need to closely monitor these trends to anticipate future movements.