on the crypto
Bitcoin skeptics are ringing the death bells, but a bullish metric has just reached a new all-time high. What does this mean for the BTC price? Most people only refer to the price of Bitcoin to evaluate the health of the best cryptocurrency. If there is a brutal sell-off, critics are quick to believe that the digital asset is dying. A small Bitcoin rally and almost everyone is tweeting about getting a Lamborghini.
Of course, price is a visible indicator of a resource's impulse. But Bitcoin's market capitalization is so small compared to other traditional businesses that its price often fluctuates wildly. A large buyer or seller can easily dictate the momentum of the cryptocurrency.
That's why for Bitcoin there is another indicator of the health of the market: addresses with any balance. And despite the recent drop in the cryptocurrency, this metric has just reached a new historic high.
Total number of Bitcoin addresses holding balances recovered this year
The bear market of 2018 saw a massive capitulation of Bitcoin users. From the high of over 28,38 million addresses with any balance in January 2018, the metric dropped to around 22 million in July 2018. This dip tells us that many people got rid of their BTC during the peak of the bear market. .
Since then, the metric has shown signs of recovery and started to rise earlier in the year. It recently eclipsed the January 2018 record to print a new all-time high of 28,39 million BTC addresses holding a balance.
This new Bitcoin record suggests increasing adoption
Investor Alex Thorn explained that this data point has its limitations, mainly because a wallet can have multiple addresses and a user can have multiple portfolios. Therefore, it would be incorrect to equate the number of addresses with the number of Bitcoin users.
However, Thorn also explained that many users store their funds on exchanges and custody platforms. These services can use a handful of addresses to protect customers' coins. Therefore, an address can contain the funds of hundreds or thousands of Bitcoin users.
In the end, Thorn concluded that the metric isn't perfect, but offers a decent estimate of the number of Bitcoin users. The growth in the total number of BTC addresses with any balance can be considered positive for the adoption of the cryptocurrency. Bitcoin is likely to be fundamentally healthier if BTC's offer is spread across multiple addresses.
The metric impulse may also indicate accumulation
Although Thorn's thread focused on what metric measured, I found it interesting that the growth in the number of Bitcoin addresses that maintain the balance coincides with the explosion of dormant addresses.
The synchronicity of these two events indicates an accumulation. He tells me that people have bought and stored their BTC in the past 12 months, hence the growth in the addresses they hold balances.
Furthermore, it appears that this trend is growing even if the Bitcoin price has taken a bad hit. It could be a bullish indicator.
