As the Bitcoin price grapples to maintain its standing in Q3 2024, overall activity has declined significantly, hitting lows not observed in several years. Following last week’s sharp drop, engagement on the Bitcoin network suffered further, plunging to levels last seen three years ago. This naturally has consequences for the BTC price, and the PrimeXBT Market Research report has outlined potential scenarios for the BTC price in light of this trend.
Bitcoin Engagement Falls to 2021 Levels
After Bitcoin’s price dropped below $60,000, the total number of active addresses on the network fell beneath 1 million. This is troubling given how long it took for the network to reach this point. However, the downturn was far from complete, as the price further declined towards $50,000, bringing total active addresses down to 800,000.
The PrimeXBT Market Research report indicates that the last instance of Bitcoin network activity being this low was in 2021, when prices hovered around $45,000. This scenario holds several implications for the price, which could be interpreted in both positive and negative lights.
On one hand, the drop in active addresses indicates that investors are less engaged with the blockchain, manifesting as a decrease in transactions. Conversely, this reduction also means that the network experiences less congestion, resulting in lower fees and quicker transaction confirmations.
The declining interest may also impact the Bitcoin price. The report suggests that this period may experience reduced price volatility. Consequently, prices typically show more stability and are less prone to drastic fluctuations. “This is what we’ve observed for Bitcoin over the last 180 days, with values trading in a range of 71,000 – 50,000,” the report notes.
Additionally, the dwindling active addresses might give investors the impression that the cryptocurrency is not a worthy investment. In this scenario, bearish pressures could persist, leading Bitcoin’s price to continue its downward trend as investors opt to sell instead of buy.
Nonetheless, this perspective is not universally accepted, as some may view it as a bullish opportunity for the price. The age-old investment phrase “Buy when there’s blood in the streets” indicates that such moments can represent ideal buying conditions. For some investors, this decline, alongside the sluggishness of the Bitcoin price, might offer a prime chance to purchase at what could be considered a discounted rate.
Featured image created with Dall.E, chart from Tradingview.com
