Knock, knock. There’s nobody home.
Bitcoin is a funny financial asset, isn’t it? Price aside, on one front its hashrate measured in terms of mining prowess seems to be on the rise. On the other hand, the number of daily active Bitcoin addresses holding the cryptocurrency seems to be on a downward spiral, all while the price is on the up-and-up.
Even as Bitcoin quickly undid the correction of the previous week which saw it not only reclaim the five-figure mark, but also surge close to its YTD high of $13,800, its usage has been on a decline.
Longhash, the cryptocurrency analytics firm, in its latest report has stated that daily active addresses for the king coin dropped to its lowest level since the beginning of the recent bull run. Although there is no official start date to the rally, April 2 saw a massive 17 percent daily gain, the highest in the year, giving it the prestige of being the ‘chosen day’ of yet another Bitcoin bull run.
A day prior to the bullish initiation on April 1, the number of daily active BTC addresses recorded were 2,000 shy of 700,000, while the price hovered around $4,000. Fast forward to two months later, Bitcoin was trading in the five-figure zone and peaked at $13,800, with addresses at 1.04 million, showing a correlation with its price.
However, following a myopically disastrous first week of July that shaved over 30 percent, it looks like addresses also took a hit. On July 7, the number of daily active BTC addresses dropped to 655,000. While the report admitted that activity drops on weekends, Longhash did not dismiss a noticeable “trend forming towards Bitcoin network usage.”
Referring to this as a “pullback in network activity,” the report added that BTC’s price action has “always been somewhat tied to its understanding of on-chain.” A prominent example of this tracking is 2017, with the report stating,
“2017 was a great example of this, where prices tracked the rise and fall in network activity very closely throughout the entire market cycle.”
Bitcoin by no means, is the only cryptocurrency that has seen a downward movement is its daily active addresses, while the price action moves the other way. The report added that coins like Bitcoin Cash [BCH] and Litecoin [LTC] have also seen a drop in network activity.
The only cryptocurrency to have survived this drop and in fact, has seen an incline in daily active addresses vis-a-vis price is Ethereum [ETH], which recorded a rise in daily active addresses over the last quarter.
“When looking at other on-chain metrics, the trend of the overall crypto landscape looks less clear. There are mixed signals across a handful of the most common on-chain metrics.”