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Correlation between active address and Bitcoin price

Most people enter the cryptocurrency market with the sole purpose of making a profit by investing, trading or hodling. This is quite understandable, and for them, price is the most important factor. Furthermore, they can go into factual detail to notice some positive or negative change over the past day, week, month, or even a year.

One of the interesting things to look at is whether there is a correlation between the number of active addresses and the price of cryptocurrencies?

Price and address

We know that the price of certain assets depends on many factors, such as fundamentals, trading volume, supply, demand, and more. Popular crypto-monitoring resource CoinMetrics said in a statement. study the number of active addresses. The report summarizes data from January 1, 2019 to December 31 of the same year.

By observing the number of unique addresses in a particular network, we somewhat get a picture of the number of users. However, it is worth noting that one person can operate more than one address; therefore, these numbers represent the maximum possible number of users, but the actual number of daily users is expected to be lower.

Talking numbers?

To explain the chart, let’s take Bitcoin as an example. The largest cryptocurrency by market capitalization started last year at around $3,750 and ended at around $7,130, representing a roughly 90% gain. Interestingly, the number of active Bitcoin addresses has also increased by almost 16%.

Let’s keep checking green data (first). Bitcoin Cash currently ranked 5th has recorded an amazing increase as it has an active address count of almost 90%. At the same time, according to the report, the price of BCH increased by 27.68%.

Litecoin is also green in both categories – up 12.56% in the number of addresses and 33.60% in price. Tezos was equally sublime in 2019, recording increases of 218% and 182% respectively.

Bitcoin SV is the second largest active address, surging 611%, while the price is much more modest – just 5.21%.

And the champion of 2019 is definitely ChainLink. It achieved an unprecedented percentage gain, where the price jumped 513% and at times even reached over 1,000%. Meanwhile, surprisingly, the number of active addresses – up over 630% year on year but also over 3,000% at times.

Red on the chart

As always, when there is a positive move, there must also be a negative move. Second largest cryptocurrencies like Ethereum and third like Ripple are all in the red. The price of ETH has dropped by 5.65% in 2019, while the number of addresses is down more than 1%. XRP’s drop rate is more severe – 46.68% and 49.14% respectively.

Stellar is also recording negative data. The price of XLM plummeted by 60%, and at the same time, active addresses dropped by 66%. The same goes for Zcash, both indexes are down about 51%.

Exceptions

Every rule has its own exceptions, and so does this chart. As analyzed, indicators can increase or decrease together, but there are cases that provide opposite data.

The first case is Cardano. The price of ADA fell more than 20%. However, the number of active addresses increased slightly by 2.38%.

Decred is the same example, but its price is down only 5.5%, while addresses have increased by more than 66%.

Conclusion

It is not yet clear whether the number of active addresses has a real effect on the price of a particular cryptocurrency, but in most cases both indices have experienced the same pattern of development in a short period of time. five. It is safe to assume that the more addresses open, the more interest in that asset, and vice versa.

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