A decrease in active addresses shows less overall activity on the Bitcoin network, implying that fewer transactions are taking place, which could reflect a lack of interest in using the network at this time.
This lack of interest could impact the price of Bitcoin, correlating with evidence of low trading volumes.
Less network activity often results in less volatility, which can lead to a period of price stability emanating from range trading or consolidation. Bitcoin has traded sideways for about 180 days, with prices ranging from $49,050 and $73,000.
For some investors, a drop in active addresses and price can be interpreted as a buying opportunity, however, this can vary. If the market views the decrease as a sign of weakness or lack of relevance in the current macroeconomic environment, new supports might emerge, thus creating fresh entry points.
According to Glassnode, a noteworthy shift has occurred in the last three months, with downward pressure increasing and causing the market to endure its most substantial fall of the cycle.
Nonetheless, from a larger perspective, Bitcoin’s spot price is trading roughly 22% below its recent ATH of nearly $74,000, indicating a relatively modest fall compared to previous bull market regimes.
Although the average Bitcoin investor is still profitable overall, the short-term holder group is still significantly underwater on their holdings, making them a source of risk currently.
At the time of writing, BTC was up 1.55% in the last 24 hours to $57,148 according to CoinMarketCap data.
This article was originally published on U.Today
Source: Cryptocurrency - investing.com
