Bitcoin Demand Up As Active Addresses Break 2021 ATH Levels
On-chain data shows that Bitcoin’s active addresses have surpassed levels seen in November 2021, suggesting demand for BTC is picking up.
Bitcoin active addresses have seen steady growth recently
As one analyst pointed out in a CryptoQuant post, there were concerns in February that the metric was not showing any significant growth. “Active addresses” is an indicator that measures the daily total number of Bitcoin addresses that participate in some transaction activity on the blockchain.
Naturally, this metric considers both senders and receivers in this measurement. It also only includes unique addresses, which means that all addresses that make repeat transactions are only counted once. Because of this, the metric can give an idea of the number of users using the blockchain on a daily basis.
When the value of this indicator is high, it means that many addresses are currently transferring on the network. Such a trend suggests that blockchain is currently seeing a high amount of usage.
On the other hand, low values imply that network activity is low. This trend could indicate that overall interest in cryptocurrency is low among investors.
Now, here’s a graph that shows the trend in the 30-day simple moving average (SMA) of active Bitcoin addresses over the last few years:
Looks like the 30-day SMA value of the metric has been observing an uptrend in recent months | Source: CryptoQuant
As shown in the chart above, the 30-day SMA Bitcoin active address metric mostly shifted sideways during the 2022 bear market. This is often the pattern seen in bear periods, as investors find the endless consolidation typically associated with these tedious periods, so only a few participants on the blockchain.
However, highly volatile events like crashes cause many users to become active. They rush to sell their coins to cut their losses or try to hit rock bottom. An example of this can be seen on the chart during the November 2022 FTX meltdown.
A similar effect is often seen with rallies, but the price increase that started this year initially saw little growth in active addresses. This raised concerns about the sustainability of the rally, as all extended price movements have historically required large amounts of daily traffic to continue.
Recently, however, it has become clear that the indicator has seen some steady and gradual growth, suggesting that commercial interest in the asset is slowly but surely rising.
Recently, the 30-day SMA Bitcoin active address metric broke above the levels seen during the November 2021 price high, showing that there is now a significant amount of demand for the cryptocurrency in the market.
At the time of writing, Bitcoin is trading around $29,700, up 1% over the past week.
BTC has sharply surged | Source: BTCUSD on TradingView
Featured Image of Aleksi Räisä on Unsplash.com, Charts by TradingView.com, CryptoQuant.com