Bitcoin (BTC) Active Addresses Near Cycle Lows Despite Strong Price Performance

• Bitcoin active addresses have declined steadily since April 2021, despite BTC’s strong price recovery since 2022.
• On-chain activity divergence: Historically, active addresses rise during bull markets, but this cycle shows a structural shift.
• Sharp drop in participation: Active addresses have fallen from around 1.15 million in April 2021 to roughly 680,000 recently.

In terms of on-chain activity for Bitcoin (BTC), mixed messages are being sent, given the ongoing decline in the number of active addresses, despite the price performance being good since the end of 2022. Some new information has been provided by on-chain analyst Darkfost regarding the structure of activity on the network for the cycle.

Active Addresses Keep Falling Since 2021

Based on the data, the number of active addresses of Bitcoin (BTC) has been steadily decreasing since April 2021. To indicate a retail participation phase, there were 1.15 million active addresses, and now there are just 680,000, a steep drop of almost 40%.

Historically, it has been noticed that bull markets are associated with an increase in actively participating addresses when new participants join the market. In this cycle, however, it seems that it is different and that prices and on-chain activity are no longer directly associated.

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A Structural Shift in Bitcoin’s Market Behavior

Although Bitcoin (BTC) has shown remarkable strength in terms of price recovery and resistance in the past two years, the trend in network engagement has been quite different. It is asserted that this is further evidence of bitcoin’s market structure shift, with price being more dominated by sentiments unrelated to network engagement.

Institutional participation, institutional holding patterns, and alternative channels of exposure might be playing an even more prominent role in the current cycle.

What It Means Going Forward

The reduction in the number of active addresses is not necessarily a bearish indicator. In fact, it could be a sign that the market is shifting towards one that is more institutional and forward-looking. While on-chain data is still valuable, its relevance to Bitcoin price movement could be shifting with the evolution of the network or its behavior.

For the time being, the ability of Bitcoin to keep the price momentum with reduced on-chain activity is an indication that this cycle is quite different from the previous cycles.

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