Following a recent dip to $58k, Bitcoin (BTC) has witnessed a notable upward trend, reaching a peak of $69k on the monthly chart.
Despite this positive movement, the number of daily active Bitcoin addresses has seen a significant decrease, dropping from 1.1 million to 980k. This decline in active addresses has sparked discussions among analysts.
According to Cryptoquant analyst Burak Kesmeci, the addition of 350k new addresses could play a crucial role in sustaining Bitcoin’s upward momentum.
The Significance of 350k Addresses
Kesmeci emphasizes the importance of new addresses in strengthening the position of Bitcoin bulls in the market.
He argues that the market’s health is directly linked to the growth in the number of new Bitcoin addresses.
Therefore, the figure of 350k acts as a dividing line between bullish and bearish scenarios. A drop below 350k in new addresses indicates a potential market downturn as bears seize control, leading to a bearish phase.
On the contrary, if the address count remains above this threshold, it signifies an increasing bullish sentiment and supports the continuation of the uptrend.
Historically, the movement of Bitcoin addresses has been instrumental in determining market trends, with the address count falling below 250k on three occasions in the past 6 years, coinciding with significant BTC price declines.
For instance, in 2018, the price plummeted from $19k to $6k, in 2021 from $64k to $30k, and in 2024 from $73k to $49k.
Therefore, surpassing the 350k mark in new addresses is indicative of a healthy market environment for investors. Despite a notable increase in new addresses in 2024, the threshold of 350k has not been breached. Address numbers peaked at 349K on October 14, 2024, after falling to 210K in June 2024, only to decrease again to 249k.
Based on this analysis, the current BTC market may not be sufficiently robust to support a sustained rally.
Implications for Bitcoin Charts
Although Bitcoin has not yet surpassed the 350k new address mark, it is currently on a strong upward trajectory. Consequently, the prevailing market sentiment favors further price gains for BTC.
Recent data shows a significant decrease in the exchange supply ratio over the past week, indicating that holders are amassing Bitcoin off exchanges, signaling a reluctance to sell in the short term.
Furthermore, the fund flow ratio for Bitcoin has risen from 0.06 to 0.15 in the past week, signaling increased demand and a bullish sentiment among investors.
At the time of reporting, Bitcoin is trading at $67714, reflecting a 5.91% increase on the monthly chart.
Therefore, if the current market sentiment persists, Bitcoin is likely to challenge the $69400 resistance level, a point where it has faced several rejections.