Bitcoin user adoption looks to be gathering pace as its price rises amid a coronavirus-induced rush for assets with safe-haven appeal.
- The number of bitcoin addresses holding at least $10-worth of cryptocurrency recently rose to a record high of 16.6 million, according to data source Coin Metrics
- That number is now up 14% from the previous peak of 14.5 million reached in January 2018, soon after the cryptocurrency's all-time price high of $20,000.
- Essentially, there are now more addresses with a small balance than were seen at the height of the previous bull market.
- The data suggests "a new bitcoin adoption cycle is brewing,” according to Lucas Nuzzi, network data product manager at crypto data provider Coin Metrics.
- Address growth is not a precise indicator of bitcoin's user base because a single individual or entity can hold multiple addresses.
- Adoption has gone up by 27% in the 4.5 months since the major crash in mid-March.
- Bitcoin’s price has rallied by over 200% during the same period, and is up 64% year to date.
- Relatively scarce assets like bitcoin and gold seem to have benefited from fears of a dwindling U.S. dollar and the inflation-boosting policies of central banks and governments.
Looking ahead
- Some analysts expect bitcoin’s price to challenge record highs by the end of December.
- Continued price gains could have an exponential effect on user growth as FOMO (fear of missing out) hits consumers.
- Bitcoin may have a tough time scaling $12,000 in the short run if traders and crypto miners take advantage of the recent price rise and liquidate holdings.
- As per Chainalysis Market Intel, 230,000 BTC (worth around $2.6 billion) with an on-paper profit of 25% or more were sent to exchanges last week.
- It's not known whether, or how many of, these coins were liquidated during Sunday’s sell-off.
- Bitcoin is trading near $11,700 at press time, representing a 0.5% drop on the day.
Correction (13:10 UTC, Aug. 8, 2020): An earlier version of this article erroneously stated Lucas Nuzzi was from Messari. This has been corrected.
Also read: Bitcoin Price Rises 3% as Gold Trades Above $2K for First Time