Recent Data About Bitcoin Activity Spells Worrisome Signs For Bitcoin
Overall Trend Upwards But Slow Growth
In the data shared by LongHash, it is visible that the growth of Bitcoin’s daily active addresses has been positive overall from 2012 to 2018 as the trendline slopes upwards continuously.
However, a closer look at the data after 2018 reveals that the growth in Bitcoin’s daily active addresses has been much lesser. In fact, the slope has hardly moved upwards since the number of active addresses have remained almost the same.
The article posits that the decline in the growth of active addresses may be due to the decline in Bitcoin price. Bitcoin price plunged sharply in 2018 following when the ICO bubble burst at the beginning of 2018. There is a strong Pearson correlation correlation of 0.76 between Bitcoin price movement and active addresses count. The reason for the same could be attributed to the shift in users’ behaviour when the price us changing. When the price is suppressed, people might be simply HODLing their coins in the anticipation of an increase in price. This correlation suggests that the number of active addresses increases when Bitcoin price is rising.
No of Confirmed Transactions Has Also Declined
The number of confirmed Bitcoin transactions, which had hit an all-time of nearly 500K on 14th December 2017, has also declined since the ICO boom of 2017. The number of confirmed daily transactions saw a sharp plunge in 2018, but they began rising after the first quarter of 2018. After reaching the year-to-date high of 450K+ daily transactions on 2nd May 2019, the count of transactions started to fall again.
This is another indicator of the fact that activity on the Bitcoin network has declined. In fact, the slopes of Bitcoin daily addresses tracker and estimated transaction value tracker from the last two years look quite similar.
What Does This Mean?
The LongHash article suggest’s that this decline in Bitcoin’s active addresses could mean two different things depending on how you perceive Bitcoin. If Bitcoin is looked at as a form of payment, then the decline is worrisome as it means that people are not using it for payments.
However, if Bitcoin is considered a store of value, then the fall in activity on the Bitcoin network is as worrisome as it could simply mean that people are HODLing the coin and waiting for its value to go up.
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