As cryptocurrency markets struggle to gather upside traction, new data shows a declining number of bitcoin active addresses on the blockchain network.
- The seven-day moving average of bitcoin active addresses – ones active on the network as sender or receiver – fell to 758,165 on Wednesday, the lowest since April 2020, per data provided by blockchain analytics firm Glassnode.
- “The decline in active user participation is a sign of weak demand,” Charlie Morris, chief investment officer at ByteTree Asset Management, said. “The hype cycle is over for now, and the market is unable to attract new entrants at the same pace.”
- The seven-day average of the daily transaction count tracked by Glassnode has also dipped below 300,000 for the first time since March 2020.
- Network usage affects the demand for cryptocurrency and can influence its price.
- “When there’s greater usage, there’s more demand for the cryptocurrency, and that drives the price up,” Philip Gradwell, chief economist at the blockchain intelligence firm Chainalysis, told CoinDesk last year.
- The count of bitcoin active addresses led the cryptocurrency higher in the final quarter of 2020.
- The cryptocurrency is trading 5% lower on the day at $33,200 at press time, having failed to keep gains above $36,000 earlier this week.