The number of Bitcoin wallets holding a non-zero BTC balance continues to rise and hit a new all-time high of 45.388 million on Sunday, according to data presented by the crypto analytics firm. Glassnode.
This represents an increase of over 2 million since the start of 2022 and is the fastest rate at which the number of non-zero balance wallet addresses has grown since the start of 2021 on the Bitcoin network.
This is good news for the price of Bitcoin, as it implies that more investors are entering the market, which means demand continues to grow.
However, a few widely followed indicators regarding activity on the Bitcoin blockchain have weakened over the past few days, following Bitcoin’s failure to breach the $30,000 threshold last week.
If Bitcoin is to break above $30,000, improvement in these metrics will likely be needed.
Decrease in activity on the Bitcoin network
The seven-day rolling average of the number of active addresses interacting daily with the Bitcoin network recently fell to its lowest level since late January.
A decrease in wallet-level activity on the Bitcoin network suggests that trading volumes have fallen from their levels over the past few weeks, implying weak demand.
Separately, the seven-day moving average of the number of new addresses interacting with the Bitcoin network recently fell to its lowest level in a month, as did the seven-day moving average of the number of transactions made on the Bitcoin network.
As above, this weakness in key metrics measuring network activity, usage, and growth suggests a slight weakening in demand for Bitcoin.
But bulls shouldn’t panic
Despite modest weakness in these metrics, they remain in an uptrend for the year and should, at the very least, remain at high levels from where they were for much of 2022 assuming price bitcoin can at least hold in the upper $20,000 range.
While Bitcoin is at risk of falling back towards the key support at $25,000, given that some technical indicators also indicated that the March price rise was becoming unsustainable, analysts expect investors to take advantage of these lows and the Price forecasts remain, for the most part, optimistic.
Indeed, the fundamental narratives that led to the dramatic rebound from mid-March levels below $20,000 are likely to remain supportive factors for the foreseeable future.
Readers will recall that three U.S. banks failed earlier this month, raising concerns of a global banking crisis and prompting traders to aggressively cut bets on further monetary policy tightening. Federal Reserve (FED) American.
As expected, the FED adopted a dovish pivot in its rate guidance at its meeting this week (despite an additional 25 basis point interest rate hike), with investors now betting that a bear cycle will begin. in the second semester.
The combination of financial crisis concerns and expectations of looser monetary policy have been the catalysts for demand for safe haven (as an alternative to fiat currency) and demand for well-performing assets in a lower interest rate environment.
Despite some recent positive developments, such as the takeover of SVB and reports of action taken by US authorities to save First Republic, the risks of bank contagion remain high.
Meanwhile, the US economic outlook has darkened significantly, and the combination of these factors means Bitcoin’s tailwinds are likely to remain strong.
As prices rise in the coming months, on-chain indicators should continue to track, adding further legitimacy to this price rise.
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