When Bitcoin’s price fell sharply four weeks ago network activity dropped as investors began to put their coins into storage. This trend is reversing as the daily transaction number is once again increasing, and coins are on the move.
Is Bitcoin Price Recovery Bringing Back Traders?
Glassnode has posted a chart of active Bitcoins that shows how the number moving across the network began to accelerate rapidly last August, only to level off last month. Now, this number is once again picking up.
Overall network activity is also once again increasing after a sharp drop in March, as seen in this chart from Blockchain.info:
The key takeaway from this information is that the flagship cryptocurrency is once again on the move. The changes in activity on the network may be relatively small, but they still demonstrate a shift away from hodling Bitcoins to using them.
In all likelihood, these increases are due to an uptick in trading, which will no doubt take place as prices rise. Many investors see the market recovery as an opportunity to make a quick profit from what is clearly a growing demand for cryptocurrency.
It is worth noting that the upcoming block halving is also providing a strong incentive to acquire Bitcoin now before the supply drops in mid-May. Also, fear of inflation and a continued global economic slowdown is driving many to put their assets into safe havens, for which Bitcoin and other cryptocurrencies are ideally suited.
Data Demonstrates Network Strength
Whereas activity volume on the Bitcoin platform ebbs and flows from month to month, it is worth noting that the network continues to work as designed. Fees remain low, and confirmation times are relatively quick.
The network will begin to show signs of congestion at around 400,000 transactions per day, which is substantially more than the present number. This last happened in 2017, resulting in slow transactions and high fees. The Lightning Network now exists to help prevent such problems from ever happening again, yet needs more work to make it reliable and user friendly enough for mass use.
It is reasonable to assume that the number of active Bitcoins will continue to increase along with overall crypto adoption. Activity across the blockchain space is accelerating, much of which is taking place in areas such as decentralized finance and supply chain tracking. Present data clearly indicates that interest in this new asset class continues to grow.
Is Bitcoin trading activity up? Share your thoughts in the comments below.
Images via Shutterstock, Glassnode, Blockchain.com