Bitcoin Total Addresses Seeing Rapid Growth, Signs of Adoption?

On-chain data shows that the total number of Bitcoin addresses has seen rapid growth recently, a sign that adoption may be accelerating.

Total Bitcoin addresses have grown by 3.95% over the past two months

According to data from the analysis company at the chain Sentiment, BTC now has a total of 45.14 million addresses. The relevant indicator here is “BTC Supply Distribution”, which tells us which wallet groups in the market include how many addresses right now.

The wallet groups here refer to cohorts divided based on the total number of coins they currently hold. For example, the group 1-10 coins includes all addresses that currently have a balance between 1 and 10 BTC.

If the Bitcoin Supply Distribution metric is applied to this group, it will measure the total number of such wallets in the market that satisfy this condition.

Since in the current case the quantity of interest is the total number of addresses across the entire network, regardless of wallet amount, Santiment has simply merged all existing address cohorts to show their combined supply distribution.

Here is a chart showing the trend in this indicator over the past year:

Looks like the value of this metric has rapidly gone up in recent days | Source: Santiment on Twitter

As shown in the graph above, the total number of addresses with between 0 and infinite BTC (that is, a range that covers wallets of all sizes in the market) had seen a sharp growth about a year ago, when the bear market was just setting in .

This suggests that new addresses were still being created at a rapid pace back then. When such a trend is seen, it means that a large number of new users are possibly joining the network, thus increasing the use of the cryptocurrency.

However, as crashes such as those triggered by the LUNA collapse and 3AC bankruptcy shook the market and a bearish transition was in full swing, growth slowed and the indicator even encountered large stretches of sideways movement.

Usually, investors find consolidating markets boring, so activity slows down during bear markets when the price shows such a trend. Naturally, the network has a hard time attracting new users under these conditions, so the increase in the total also addresses plateaus.

On the contrary, volatile moves are exciting for holders and thus bring a lot of attention to the blockchain, which ends up drawing in new users to the cryptocurrency. An example of this is clearly visible during the FTX crash in the chart, where the addresses suddenly jumped during a period of otherwise slow growth.

With the recent Bitcoin rally over the last couple of months, the indicator’s value has once again started showing a sharp increase, suggesting that many new users are being attracted to the asset now.

In this period alone, the total number of addresses has grown by almost 4%, a noticeable increase in such a short time. More adoption is generally a positive sign for any coin, as it provides a sustainable base for long-term growth.

BTC price

At the time of writing, Bitcoin is trading around $24,900, up 15% in the past week.

BTC has stumbled since the rise above $26,000 | Source: BTCUSD on TradingView

Featured image from André François McKenzie at Unsplash.com, Charts from TradingView.com, Santiment.net