According to data from the analysis firm Glassnode, the number of active Bitcoin addresses, is at a very low point. The point at which these addresses are located, in terms of usability, is the same as April 2020. Likewise, this decrease in activity could suggest a weak demand, which in the long run would have an impact on the price of the digital asset.
The data were cited by the news portal CoinDesk, in this, it is highlighted that the low activity expresses a moment of low interest. In addition, it is highlighted that, during times of increased activity in directions, this translates into an increase in supply and coincides with upward trends.
«The momentum cycle is over for now and the market is unable to attract new users at the same pace“, considers Charlie Morris of ByteTree. This is one of the factors that point to the prolongation of a bear market in the main cryptocurrency. Another factor that keeps the coiner community on hold is the upcoming difficulty adjustment. It is expected to be more than 26% down.
Can the low number of active wallets influence the price of Bitcoin?
As noted above, the low number of active wallets, could have a direct impact on the price of Bitcoin. This is Philip Gradwell’s appreciation of the Blockchain firm Chainalysis, consulted on the aforementioned news portal. According to him, the ebb and flow in the magnitude of the activity of the wallets, has a proportional relationship with the value.
«A high magnitude of use, higher demand for cryptocurrencies is reflected, which brings the price up», stress. According to this view, the aforementioned dynamic also applies in the opposite direction. In other words, the current conditions of this indicator could be expected to signal a downtrend.
At the time of writing, the price of Bitcoin hovers around $ 33,000, staying down by 2.04% in the last 24 hours. It should be noted that it did not manage to stay above $36,000 after several attempts last Wednesday.
In that sense, the low number of active portfolios, could have its contribution in this weakness of the bulls in the price of Bitcoin. However, one cannot consider the only factor that could be playing to keep the price of the pioneering digital currency in red figures.
Other possible factors in the price drop
The average of 10 minutes per block of the Blockchain network, at this time is distorted. Massive disconnections in China have caused an unprecedented drop in the hashrate of this digital currency. Last week, the time between blocks went up to about 20 minutes.
This last fact leads directly to an adjustment in the difficulty of the network. According to data from Btc.com, it is estimated that the next adjustment, which will be shortly, could go down by more than 26%. This has two results, the first is that it is easier to mine and the rewards to active miners will be higher. The other factor is that there is a more vulnerable network in terms of security.
A weak network generates nervousness among investors, who could move their capital to other assets. The selling pressure, in this case, would reinforce the downward price trend. Thus, the low number of active Bitcoin wallets plus the weakness of the network, complement each other to hinder the rise in the price of the cryptocurrency.
The capitulation of the miners
The migration of miners from China to places as far away as the United States is a slow and complex process. Meanwhile, those miners will have to liquidate part of their bitcoins to cover the huge costs of moving and reinstalling their infrastructures.
That sale by miners, known as” capitulation, ” could flood the bitcoin market. In that way, the pressure to sell could be an additional factor to the weakness of the price of Bitcoin in the buy and sell market. Probably, this fact is behind the exhaustion in terms of address activity.
All these factors must be taken into account when making a fundamental analysis of the price trend. It should also be borne in mind that there are other factors that do not cease to exert their influence. Among them, the active campaign to discredit digital mining stands out.
It should be remembered that, precisely, this narrative handled by Tesla CEO Elon Musk, was responsible for bringing the price to the current hole. In mid-May, the price of the popular digital currency, was approaching $65,000, when the aforementioned businessman took his lunge. At the time it announced the suspension of the use of BTC in the trade of its electric vehicles due to the alleged contamination of mining. The result was an abrupt fall in price.
Signs of exhaustion
Amid this negative news conjuncture, interest in cryptocurrency has dropped considerably. Consequently, this behavior can be seen in the low volume of active Bitcoin wallets of the last few weeks. The number of them is 758,165, which is equivalent to April 2020.
It can be considered that the lack of positive news that counterbalances the negative ones, is a factor that generates exhaustion. Many of the people who have their savings in Bitcoin, are witnessing its decline in fiat equivalence, which generates nervousness.
That anxiety, in simple terms, influences that, for now, those small investors do not want to continue injecting in Bitcoin. Some influential characters in cryptocurrencies, such as MicroStrategy’s Michael Saylor and Twitter CEO Jack Dorsey, are making efforts to maintain investor enthusiasm.
One of these efforts is the The B-Wrod, an event to be held later this month. It seeks to attract institutional investors and large companies to invest in Bitcoin. It should be noted that Elon Musk and Jack Dorsey will meet to discuss the essential aspects of Bitcoin.
Data to consider
- The Bitcoin market seems to enter a stage of exhaustion, brought on by selling pressure and other negative news.
- All these facts could be the cause of the current drop in demand, which is reflected in the decrease in the number of active Bitcoin wallets.
- Exhaustion and selling pressure would not have allowed Bitcoin to stay above $ 36,000 per coin.
- At the time of writing, the price of the pioneer cryptocurrency barely holds above $33,000.
- Cryptocurrency momentum is failing to increase the pace of movement attraction.