Bitcoin’s price action has remained uncertain as a crucial metric, active addresses, continues to decline. Analysts suggest that the drop is largely due to institutional investors increasingly holding onto their assets, creating less network activity.
The number of active Bitcoin addresses, a measure of user engagement on the network, has significantly decreased since the beginning of 2024. Historically, such a decline has only occurred after Bitcoin’s price peaks, as seen in the 2017 and 2021 bull cycles. However, this time, Bitcoin’s price has been moving sideways without a clear direction.
At the time of writing, Bitcoin traded at $56,666, marking its lowest level since mid-August. CryptoQuant analyst “Avocado on-chain” observed that many Bitcoin holders seem to have shifted their focus to long-term investments, locking up their assets in cold wallets. This change in behaviour has contributed to the sharp drop in active wallet activity.
Avocado onchain said that if active addresses bounce back, Bitcoin’s price will likely follow. Source: CryptoQuant
Swyftx lead analyst Pav Hundal noted that institutional investors are holding their Bitcoin in secure wallets, further reducing on-chain activity. He emphasized that since the launch of Bitcoin ETFs in January, wallet movement data has become less relevant in understanding market trends.
Prominent Bitcoin advocate Timothy Peterson described the drop in active addresses as “completely anemic,” raising questions about the future of Bitcoin’s network engagement. Meanwhile, 10x Research pointed out that Bitcoin’s market behavior does not always follow a predictable cycle, often experiencing rapid price surges when demand shifts unexpectedly.
Despite the decline in active addresses, analyst Will Clemente highlighted that Bitcoin’s peak compound annual growth rate (CAGR) may be behind us, but investors could still see significant returns with the right investment strategy. While Bitcoin’s short-term future remains uncertain, long-term holders and institutional investors are reshaping the landscape.
