While Bitcoin’s price has been famously volatile for most of its existence, there is one metric that has shown predominantly an upward trajectory, which has, in turn, played its role in the growth of the digital currency.
Bitcoin’s Daily Active users have been growing at a rather impressive rate pretty much since its inception. There have been some points where drop offs have occurred, but for the most part, Bitcoin has been adopted by individuals at quite a rate.
However, recent data has shown that the daily active users of Bitcoin have seen a significant fall. In fact the last two years show a pattern that does not give an indication of a growing metric. The question is: “Is Bitcoin wallet adoption at its peak? Are Bitcoin users just not that interested anymore, and what does this mean for the future adoption of the coin?”
Longhash analysed Coin Metrics’s daily active address count data to show how, from January 10, 2009 through December 1, 2019 the overall trend is upward. But, the last two years, the trend has actually been rather flat, or verging on downward.
Looking at the two graphs below, it is clear that zooming in, in the latter graph, to December 2017 up to present, shows that the number of Bitcoin wallet addresses that have been active are not growing. Part of this has to be down to crash of 2018.
Still, if the crash was the catalyst that stopped the upward trend, it is still concerning to see that since then, there has been very little growth to speak of. Even in June this year, when positive sentiment ruled throughout cryptocurrency, the increase was not that significant.
Indeed, what this metric could be showing is that Bitcoin is suffering from a lack of direction or designation. The coin is flip flopping between being a currency and being a cash-like payment system.
“If Bitcoin is meant to be a form of payment, as outlined in its initial whitepaper, then a lack of growth in its active network is indeed concerning. But if Bitcoin is a store of value like gold, as many proponents now argue, then the active address count probably matters less. After all, many users who deeply value Bitcoin may not be trading actively, but if Bitcoin is a store of value like gold, that shouldn’t diminish its worth,” Longhash theorized.
“Even so, the correlation between active addresses and price is pretty clear. Whether you want Bitcoin to be a form of payment or a store of value, you probably want the price to go up. Correlation isn’t causation, but the data suggest that if the active address count rises, the Bitcoin price is likely to be rising too, so getting more people on board Bitcoin certainly couldn’t hurt.