Active Bitcoin Addresses Sink to Decade-Low, Market Looks Towards Consolidation
Summary:
Bitcoin active addresses have hit their lowest levels since November 2010, as per IntoTheBlock's onchain data - a sign pointing to a possible market consolidation. Further, as investors are prepping for an increase in whale movements with a dip in the activity rate, larger holders, including ones linked to governments, have participated in substantial sell-offs. However, Juan Pellicer, a senior researcher at IntoTheBlock, points out most of the bearish trading activity is happening offchain. Lastly, the introduction of Bitcoin Runes, initially seen as an alternate revenue for miners, has seen a decline in activity, but it is likely temporary.
Active Bitcoin addresses have plunged to their minimum levels since November 2010, as revealed by data from IntoTheBlock's onchain analytics. In the month of June, the proportion of active wallets on a weekly basis dipped to as low as 1.22%, reaching a high of only 1.32%, a peak point not seen since November 2010. Simultaneously, the total quantity of active wallets has stooped to the lowest levels in several years. The last week of May was home to only 614,770 active wallets, a number not seen since December 2018. A shrinking active address ratio hints at a paucity of trading activities by holders, indicating that the market is most likely in a consolidation phase. The number of active addresses has dwindled to the levels of yesteryears. Source: IntoTheBlock Juan Pellicer, an eminent researcher at IntoTheBlock, attributes the decline in Bitcoin wallet activity to lukewarm retail participation vis-à-vis earlier cycles. He said in interview with Cointelegraph that this surge in the year to a record peak was steered by institutional investments rather than retail investors, an outcome potentially influenced by the broader economic climate which may have deterred retail investors from pouring as many funds into crypto as they would have otherwise done. German government sells off 900 Bitcoin, 400 BTC relayed to Coinbase and Kraken Meanwhile, as investors prepare themselves for an increase in whale movements, including a July disbursal of payments to creditors by the Mt. Gox trustee, there has been a noticeable slide in the activity rate. A number of large holders including ones associated with governments have been seen engaging in selling activities. Pellicer adds, "This concentration leads to bearish trading activity largely being conducted offchain, leaving onchain address activity statistics relatively unscathed." Is the Rune struggle real? The declining activity seems paradoxical to the unveiling of Runes, a protocol of fungible tokens launched alongside Bitcoin's most recent halving incident in April. Post the introduction of Runes, miners expected an alternative income source. True to expectations, they received record trading fees on the day of halving. However, transaction fees quickly reverted to pre-halving levels as miner reserves, or the brand-new Bitcoin owned by miners, also hit 14-year lows. Pellicer has reported a waning activity on Runes, attributing it to the cyclical behaviour of such assets and positing their current position as a temporary inactivity rather than permanent deterioration. In the backdrop, there has been a shift in focus to memecoins and celebrity tokens, drawing in speculators seeking higher returns. Bitcoin's current stability may seem out of character for a currency known for volatility, especially when compared to more volatile lower-capital memecoins. According to a magazine, 68% of Runes are in the red, raising questions about whether they truly hold an advantage for Bitcoin.
Published At
6/28/2024 12:04:02 PM
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