The number of Bitcoin active addresses doubled according to a report from crypto financial data provider Coin Metrics
The latest ‘State of the Network’ report (Issue 82) by Coin Metrics was published yesterday detailing the terrific rollercoaster of a year cryptocurrencies had. A section of the report revealed that the number of Bitcoin active addresses had surged by almost 105% this year. As of writing, there are 1.2 million Bitcoin active addresses according to Coin Metrics.
Implications for the crypto market
The number of active addresses is a fundamental metric used to determine how healthy a crypto market is. This is because active addresses generally represent people using or buying the crypto asset.
As a rule of thumb, the higher the number of active addresses, the healthier a market is – the reverse is true as well. Going by this, the current number of Bitcoin active addresses implies the Bitcoin market is doing well. Coin Metrics reports this is the healthiest the bitcoin market has been since 2017.
Who’s responsible for this healthy market?
The crypto data site believes the healthy market comes down to the increased institutional adoption of Bitcoin. The last few months have seen a deluge of institutional investors saturate the Bitcoin market led by MicroStrategy and Square. Last month, Pantera Capital claimed that Square and PayPal were collectively gobbling almost every newly mined Bitcoin creating a shortage in the market.
“Soon after (institutional investors came in) Bitcoin’s price began to rise. It would keep on rising for most of Q4. As institutions continued to join, the narratives around bitcoin started to shift,” a section of the report read.
Positive outlook for 2021
The crypto data provider further pointed out Bitcoin’s market capital grew by more than $300 in 2020. The number of addresses with more than 0.01 BTC also spiked by over 700,000. Coin Metrics predicts that Bitcoin will have a good run next year and its market capital will continue swelling.
“In many respects, Bitcoin is in its strongest position yet closing out 2020. As momentum continues to build, Bitcoin is on the verge of reaching unprecedented heights in 2021.”