Key Points
- Bitcoin has seen a strong upswing, but a decline in active addresses raises concerns.
- 350k new addresses are crucial for Bitcoin to maintain a sustained uptrend, according to Cryptoquant analyst.
Bitcoin [BTC] has seen a significant increase of 5.91% over the past month, reaching a local high of $69k from a low of $58k. Despite this positive trend, a noticeable decrease in Bitcoin’s daily active addresses has sparked discussion among analysts.
Active addresses have dropped from a peak of 1.1 million to 980k. Cryptoquant analyst Burak Kesmeci has argued that the creation of 350k new addresses is essential for Bitcoin to maintain an upward trend.
The Importance of 350k Addresses
Kesmeci believes that the creation of new addresses is vital for Bitcoin bulls to gain market strength. He states that a healthy market is characterized by an increasing number of new Bitcoin addresses.
The 350k level, according to Kesmeci, is a critical pivot point between bulls and bears. If the number of new addresses falls below this threshold, the market may experience a significant downward movement, indicating the start of a bear season. Conversely, if the number of addresses remains above this level, it suggests that bulls are gaining strength and the uptrend is likely to continue.
Historically, the number of Bitcoin addresses has been a crucial indicator of bull and bear seasons. For instance, in the past six years, Bitcoin addresses have fallen below 250k three times, each time followed by a decline in Bitcoin’s value.
Despite the current strong uptrend, Bitcoin has yet to reach the critical 350k new address mark. Therefore, according to Kesmeci’s analysis, the Bitcoin market may not be robust enough to sustain a prolonged rally.
Current Market Sentiment for Bitcoin
Despite the concern over the number of new addresses, market sentiment for Bitcoin remains positive. Indicators such as the exchange supply ratio and the fund flow ratio suggest bullish market sentiment.
The exchange supply ratio has seen a sharp decrease over the past week, implying that holders are accumulating Bitcoin and keeping it off exchanges, indicating no immediate intention to sell. Similarly, Bitcoin’s fund flow ratio has risen from 0.06 to 0.15 over the past week, suggesting increased demand for Bitcoin.
At the time of writing, Bitcoin was trading at $67714, marking a 5.91% increase on monthly charts. If the current market sentiment continues, Bitcoin may attempt to break the $69400 resistance level, where it has previously faced multiple rejections.
