Dec 05, 2019 11:32 AM | Charlie Custer

For almost its entire history, Bitcoin’s network has been getting bigger. But that trend may be on the verge of reversing.


Using Coin Metrics’s daily active address count data, we took a look at Bitcoin’s daily active address count every day from January 10, 2009 through December 1, 2019. The overall trend, as you could certainly guess, is upward. For example, the trendline for active addresses from 2012 to 2018 is pretty unambiguous — it slopes continuously upward.


1-Bitcoin’s-Active-User-Growth-Has-Slowed-to-a-Near-Stop.png


But the nearly two years since then have seen much less growth. Here’s a chart looking at that same daily active address data in 2018 and 2019:


2-Bitcoin’s-Active-User-Growth-Has-Slowed-to-a-Near-Stop.png


The upward slope has almost entirely vanished, and while some of the drop can certainly be attributed to Bitcoin’s sharp crash in early 2018, it’s notable that the number of daily active addresses really hasn’t changed much in the months since then.  


The Coin Metrics data also show that Bitcoin’s active address count has followed a trajectory similar to the broad trends in its price moments. Analysis of these two figures (daily active addresses and daily close price in USD) revealed a Pearson correlation coefficient of 0.76, which suggests a strong positive correlation. It’s not clear what, if any, causation exists, but that does suggest that if the Bitcoin price rises sharply again in the future, the active address count is likely to rise, too. 


3-Bitcoin’s-Active-User-Growth-Has-Slowed-to-a-Near-Stop.png


But what does all this mean for investors? It depends on your perception of Bitcoin’s purpose.


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. 


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.



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