Bitcoin: number of wallets still on the rise

Over the past few weeks, as the price of Bitcoin fell, the number of wallets continued to rise. 

This was pointed out on X by crypto analyst Ali, showing a graph from Glassnode. 

In particular, the number of new active addresses on Bitcoin’s blockchain began to rise after returning to the $31,000 level in June, and continued even as the price fell below $29,000. 

According to Ali, this bullish divergence between price and network growth suggests a stable long-term bullish trend in the price of BTC. 

Bitcoin’s volatility at lows

The new weekly Bitfinex Alpha report on crypto markets was recently released

One of the most interesting data in the report is especially the record low volatility. 

In fact, the so-called BVOL, or the 24-hour BTC price volatility of Bitcoin, has

hit an all-time low before a slight increase, perhaps heralding significant price movement on the horizon.

In particular, on the one hand, new addresses rising despite the price decline suggest that the trend over the medium term is not a downtrend, and on the other hand, the reduced volatility at the lows suggests that some major movement may occur sooner or later. 

Equity markets

The report also notes that over the past week traditional financial markets have fallen, after a long rise. 

Taking the Nasdaq 100 index as a reference, up until 19 July it had almost always risen in 2023, except for a few brief retracements. 

In particular, it had made two significant rises in recent months, namely a cumulative +15% between May and the first half of June, and then an additional +8% in the first three weeks of July. 

Since the annual peak on 19 July it has cumulatively lost 3.7%. 

This movement, combined with a particularly low volatility index (VIX), according to Bitfinex analysts potentially suggests an impending trend change, not least because the VIX often rises in the second half of the year.

Such a change in trend is expected to be influenced primarily by the economic-financial performance of the US, and in particular by the Fed’s subsequent monetary policy. 

Inactive Bitcoin wallets

Despite the increase in new addresses, the latest Bitfinex Alpha report notes that nearly 70% of all existing BTC turns out not to have been moved in the past twelve months. 

In other words, less than a third of Bitcoin have actually been used in the past year, while most are idle probably because their holders prefer to stick to holding them over the long term. 

Moreover, 55.7% have not even been moved in the last two years, and 40.1% in the last three. 

More than a quarter, or 29.1%, appear to have been stationary since the 2018 bear-market, though some of these are BTC that should be considered lost due to the loss of the primary key to the address on which they are held. 

These numbers suggest that the prevailing strategy is one of accumulation, with many BTC holders believing that the value of Bitcoin is likely to increase over the long term, despite the collapses. 

Added to this is the fact that 96% of the 21 million BTC that may ever exist have already been mined, and over the next five years this percentage will rise to 98%. 

The strategy of holding Bitcoin

These numbers not only show that the single strategy preferred by Bitcoin holders seems to be holding, but also that this preference may even be growing this year. 

If the number of new addresses grows even with the falling price, one can imagine that this is precisely due to new holders taking advantage of falling prices to buy BTC with the goal of holding it over the medium or long term. 

Then again, there are many who expect a new bull run sooner or later, perhaps after next year’s halving. 

It is also not necessarily the case that this strategy is mostly used by small retail investors, partly because it may not be a strategy capable of enabling stratospheric returns anymore. 

In general, retail investors are more like gamblers than true investors, and they often only go in search of the big score that can make them a lot of money and in a short time. 

By contrast, holding is a strategy more suited to more shrewd and prudent investors, so it is by no means impossible for new holders to be whales or investment professionals who allocate a small percentage of their assets to Bitcoin. 

At a time of very low hype, such as this one, it is hard to imagine that speculators are buying BTC, while it is more plausible that those aiming to achieve perhaps lower results, but with a slightly lower degree of risk, are doing so.