In this article, BeInCrypto looks at on-chain bitcoin indicators like the number of transactions and address count. This is done in order to compare patterns with prior market cycles.
The number of BTC transactions is increasing but is still disproportionate compared to the price increase. On the other hand, the number of addresses with a non-zero balance is approaching a new all-time high.
Number of BTC transactions
The number of BTC transactions has not always increased alongside the BTC price. While transactions reached an all-time high of 406,953 in December 2017, the BTC price reached its current all-time high in April 2021.
Interestingly, the number of transactions has created three lower highs (black arrows) since the aforementioned 2017 all-time high. This means that the increase in price is not fully supported by a proportionate increase in the number of transactions, though the two clearly have a positive relationship.
Since the April 2021 all-time high, both the BTC price and the number of transactions have been decreasing. The latter reached a yearly low of 195,248 on July 2 before finally bouncing.
Therefore, even though the number of transactions is now moving upwards, the reading can still be seen as bearish when compared to the price movement.
Total number of addresses
The number of non-zero BTC addresses provides a different outlook when compared to the number of transactions. This figure has continued to increase since the 2017 top and reached new all-time highs roughly at the same time that the BTC price did.
However, its movement differs considerably from that of the 2014-2017 market cycle.
In the 2014-2017 cycle, there were two dips in the indicator (black circles) prior to the crash in December 2017 (black arrow).
In the current cycle, there were also two dips in late 2020/early 2021. However, after the April all-time high price was reached, what followed was not a sharp fall, but rather a very gradual decrease, more akin to consolidation.
Therefore, the decrease after the current all-time high price is nothing like the decrease after the 2017 high, which was followed by a two-year corrective period.
The movement is seen more clearly when zooming in and shows that the number of addresses with a non-zero balance is moving toward a new all-time high.
Bitcoin addresses by quantity
Finally, the addresses are divided by the quantity of BTC held. They are categorized as follows:
- Addresses with more than 1 BTC = green
- >10 = blue
- >0.1 = purple
The number of addresses with a balance higher than >0.1 is close to reaching a new all-time high. However, those with >1 and >10 are lagging behind.
Therefore, the ongoing increase in the number of BTC addresses is fueled mostly by small accounts. This is not a bullish development, since small account domination is normally seen as a sign of a market top.
However, the increase in medium and large accounts, while being disproportionate, can still be a sign of accumulation prior to the continuation of the bull run.