As Bitcoin’s price struggles to stay afloat in Q3 2024, activity has also declined, reaching levels not seen in years. With the most recent crash last week, activity on the Bitcoin network has taken another negative hit, causing it to drop to levels not seen in three years. Naturally, this has implications for the price of BTC and the PrimeXBT Market Research report has shown what could happen to the price of BTC following this development.
Bitcoin activity drops to 2021 levels
After the Bitcoin price dropped below $60,000, the total number of active addresses on the network fell below one million. This is a concerning development considering how long it took the network to reach this milestone. However, the decline was far from over and as the price fell towards $50,000, the total number of active addresses dropped to 800,000.
According to the PrimeXBT Market Research report, the last time activity on the Bitcoin network was this low was in 2021, when the price was still hovering around $45,000. This naturally has a number of connotations for the price, which can be good or bad.
On the one hand, the decline in the number of active addresses suggests that investors are not actively engaging with the blockchain. This translates into fewer transactions being made. But on the other hand, it also means that the network will be less congested, leading to lower fees and faster transaction confirmation times.
The decline in interest in bitcoin could also have implications for the price of bitcoin. The report notes that this is a period when price volatility could be lower. As a result, prices are generally more stable and less likely to experience wild swings. “This is what we have observed for bitcoin over the past 180 days, with bitcoin trading in a range of 71,000 to 50,000,” the report states.
Additionally, the decline in active addresses could also suggest to investors that the cryptocurrency is not worth investing in. In such a case, the bearish headwinds could continue and the Bitcoin price would continue to fall as investors would choose to sell rather than buy in this situation.
However, this sentiment is not shared by the entire market, as it could also be bullish for the price. The old investing adage that says “Buy when there is blood on the streets” suggests that times like these are the best times to buy. So, for some, this drop, coupled with the slow price of Bitcoin, could present a perfect opportunity for investors to get in at a price that could be considered a discount.
Featured image created with Dall.E, chart by Tradingview.com
