Bitcoin Active Addresses Have Seen A Sharp Plunge Recently
Glassnode’s weekly report shows that active addresses are currently at cyclical lows of 566,000. The “active addresses” metric measures the daily number of unique Bitcoin addresses participating in some transaction activity on the blockchain.
This indicator only checks whether an address has been involved in a transfer at least once, meaning its contribution to the active addresses metric will remain just one unit regardless of how many transactions it makes. However, as the number of unique addresses can serve as an analog to the number of unique users visiting the blockchain, it provides an estimate for daily users on the network.
Another key indicator used to track activity on the Bitcoin blockchain is “transaction count,” which tells us about total transfers taking place each day. When this metric has a high value, it indicates many transactions occur on-chain and implies there is significant demand for using BTC’s network presently; however, it cannot provide information regarding how distributed this activity may be across different wallets or accounts – hence why we use active address metrics too!
Rapid Rise In Transaction Count Due To BRC-20 Tokens
A recent surge in Bitcoin’s transaction count was due to new fungible tokens created via Ordinals protocol called BRC-20 tokens being introduced onto BTC’s chain. These tokens started a new memecoin mania with PEPE being one example experiencing rapid popularity leading up until now where demands for transacting within networks exceed previous levels seen before their arrival!
Active Address Decline Despite High Demand For Transactions
Looks like the metric has plunged recently | Source: Glassnode's The Week Onchain - Week 20, 2023
Despite high demand for transactions on BTC’s network due to BRC-20 tokens and other factors such as increased adoption rates by institutional investors, active addresses have seen a decline. From the chart above, it is apparent that while there was an initial rise in active addresses following the introduction of these new tokens onto Bitcoin’s blockchain; this trend soon reversed itself leading up until now where we are at cyclical lows.
This suggests that although transaction activity may be increasing rapidly right now, most of it comes from repeat transfers made by a small number of users who appear to be reusing their Bitcoin addresses rather than creating new ones each time they transact. This could potentially indicate some confusion among certain groups regarding how account-based chains operate compared with UTXO systems used by BTC.
BTC has shot up over last 24 hours|Source:BTCUSD on TradingView
At present, Bitcoin is tradingSponsored Product around $27,400 which represents a decrease of approximately one percent within the past week.
The featured image for this article is sourced from Kanchanara on Unsplash.com whilst charts come courtesy of both TradingView and Glassnode respectively!
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