Bitcoin’s Activity In The Chain Is Behind The Price Movement, But Why?

The data shows that network activity has not improved much in the past week, despite the price of Bitcoin rising rapidly. Why can such behavior?

Bitcoin tops $ 50K, but activity lags

Network activity appears to be slowly recovering despite high cryptocurrency prices, according to a mysterious research report released this week.

The metric used to measure activity here is an indicator of the average number of active bitcoin addresses for 7 days, and as the name suggests, it shows the number of addresses on the network where transactions are made over a certain period of time.

Now here’s a chart based on the price of the number of active BTC addresses (for an average of 7 days) :

Bitcoin’s activity appears to be lagging behind its price / source: Confidential Research

Looking at the graph above, two things become clear. First, the number of currently active addresses is just under 900k. this indicates that the indicator has definitely recovered from the level of about 750 thousand after the price drop.

Second, while the price of bitcoin has now risen to about $ 50k, the event has not yet reached such a big peak. Active addresses are still at the same level in the summer of 2020, when the price is about $ 10k. when the bull rally takes place, and before, in 2021, the same value will surpass 1.2 million people.

Read / ” buckets of addresses / bitcoin build-up suggests $ 50k rally will be long

The question now is, why is the indicator behind the price this time? This development can be explained in two ways.

First, there may be a low number of active address drop signals. Investors may not be very interested in bitcoin at the moment, so they haven’t put their investment into it.

Another reason is that more investors now see BTC as a store of value, so they have no reason to move their money. This means a bullish signal for the market, as there are longer-term owners in the network

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