Bitcoin Active Addresses Hit New Lows: Bearish Signal or Buying Opportunity?

Bitcoin (BTC) has reclaimed levels above $57K, but network activity remains low, with the current trend mimicking past bearish trends. 

The king of cryptos was trading at $57,948 at the time of writing after a slight 1.3% gain in 24 hours. Trading volumes have jumped by more than 30%, as seen on CoinMarketCap.

While the trend is showing signs of a rebound, activity on the Bitcoin network is not supporting the uptrend, and gains are solely in the hands of broader market sentiment.

According to a CryptoQuant analysis, the number of addresses in the Bitcoin network dropped to record lows in 2024. Active addresses on the network are currently at levels that were last seen three years ago.

This decline indicates waning interest in Bitcoin, and it could precede a decline in volatility. If network usage does not significantly change, BTC will continue trading rangebound.

Since March, BTC has moved between $50K and $73K, with no significant breakouts. If volatility returns in the market, the trend will be confirmed, either downward or upward.

Where is Bitcoin Headed?

According to one analyst on X, Bitcoin’s price has been trending lower with lower highs in recent months. To rally higher, BTC needs to break out above $68,000 and out of the trendline. Failure to do so will cause BTC prices to continue to dip.

The Stochastic Relative Strength Index (RSI) on the weekly timeframe is at 17. This shows that BTC is currently in the oversold territory, and traders might start buying the dip in anticipation of a price jump.

Bearish momentum is also seen on the Moving Average Convergence Divergence (MACD) histogram bars, which have been predominantly red since May.

While the extended bearish momentum might soon reach exhaustion and support a trend reversal, demand for Bitcoin remains notably low as both the stochastic RSI and MACD lines are below the signal lines.

(Source: TradingView) 

Bitcoin might also need to collect liquidity at $49,000 before resuming an uptrend. Such a drop could happen if support at $55,800 fails. 

Moreover, institutions remain uninterested in buying the dip; some are even selling. According to Lookonchain, the crypto asset management firm Ceffu has deposited $182M of Bitcoin into Binance since August 26.

Looking at the spot Bitcoin exchange-traded fund (ETF) market also shows declining market interest. Data from SoSoValue shows Bitcoin ETFs have recorded consecutive outflows since August 27.

This shows insufficient demand to support a Bitcoin rally, and the price could continue to show weakness.