On-chain data shows the Bitcoin active addresses metric is forming a triple bottom right now. Here’s what happened the last time this pattern formed.
30-Day WMA Bitcoin Active Addresses Forms Triple Bottom Structure
As pointed out by an analyst in a CryptoQuant post, the price of the cryptocurrency saw a sharp increase when this kind of triple bottom structure took shape back during the 2018-2019 bear market.
The relevant indicator here is the “active addresses,” which measures the daily total number of Bitcoin addresses that are getting involved in some kind of transaction activity on the chain.
The metric accounts for both senders and receivers in this calculation, and it also only counts unique addresses, meaning that if the same address makes multiple transfers in a single day, it’s still counted only once.
When the value of this indicator is high, it means a large number of addresses are taking part in some transfer activity right now. Such a trend suggests traders could be active in the BTC market currently.
On the other hand, low values imply not many users are active on the blockchain at the moment. This kind of trend can be a sign that the general interest in the cryptocurrency is low currently.
Now, here is a chart that shows the trend in the Bitcoin active addresses over the last few years:
Looks like the value of the metric has been rising in recent weeks | Source: CryptoQuant
As displayed in the above graph, the version of the Bitcoin active addresses here is actually the 30-day weighted moving average (WMA) one. A WMA is a type of MA that puts more weight on the newer data as compared to the older one (hence the “weighted” in the name).
From the chart, it’s apparent that this indicator’s value had plunged pretty hard as the 2018-2019 bear market started and had remained at pretty low values throughout it.
The metric had made some attempts to put together an uptrend, but it failed the first two times and created local bottoms. These bottoms, along with the bottom for the initial plunge, together formed a sort of “triple bottom” shape.
Following the last of these three bottoms, the metric was finally able to amass together some actual upwards momentum, as it then went on to rally to a local top.
Alongside this rise in the 30-day WMA active addresses, the price of Bitcoin also observed a rally out of the bear market lows, in an event now called the April 2019 rally.
There have been some interesting similarities already between the April 2019 rally and the latest price surge that BTC has been observing. Curiously, the active addresses indicator has formed a similar triple bottom pattern in this bear market as well.
“If Bitcoin follows the triple bottom structure of the last major cycle, we’re about to see incremental price increases across 2023,” explains the quant.
At the time of writing, Bitcoin is trading around $22,400, down 5% in the last week.
The value of the asset seems to have gone stale since the plunge | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com