Activity on the Bitcoin network has collapsed to 2018 lows: a signal for the bottom?
The number of active addresses in the Bitcoin network has reached levels last seen during the 2018–2019 bear market. According to my analysis of on-chain data, the 30-day moving average (EMA30) dropped to 609,688 active addresses on July 19, only slightly above the low of 570,710 recorded in July 2018. The corresponding 100-day metric (EMA100) fell to 621,957 on July 27, compared to 605,433 in January 2019.
Active addresses are unique wallets that sent or received BTC within a day. It is important to understand that this metric does not equal the number of users, as one person can control multiple addresses. EMA30 and EMA100 smooth out daily fluctuations, allowing a view of the long-term trend in network activity.
Comparison with the previous cycle: what does it mean?
I compared the current lows with the bottom of the previous bear market. When the Bitcoin price hit its all-time low of $3,206 on December 14, 2018, both moving averages were above current values: EMA30 was at 625,967 and EMA100 at 632,754. Notably, the extremes in activity and price did not coincide in time back then: the EMA30 low was reached 166 days before the price bottom, and the EMA100 low 44 days after. This suggests that there is no direct synchronization between the decline in activity and a trend reversal.
Similar activity levels also occurred during the 2016–2017 bull run. This confirms the conclusion that the absolute value of active addresses is not tied to price lows and cannot be used as a standalone signal for entering a position.
Where is the market now?
The price bottom of the current period occurred at $58,535 (June 30). Activity lows followed 19 and 27 days later, respectively, after which both moving averages turned upward and by August 8 had risen to 664,764 and 640,603. I describe this picture as a "joint recovery": the price holds above the June low, and both averages are above their July levels. Such a combination aligns with the hypothesis of a price bottom forming, although historical comparison does not directly prove it.
Three levels are now critically important for confirming this hypothesis: above 609,688, the recovery of 30-day activity holds; above 621,957, the 100-day activity holds; and the price of $58,535 remains the reference low of the period. A break of one of the activity lows would only invalidate the corresponding part of the recovery. The deeper 2018–2019 values will remain a historical reference point, not a calculated target. A close below $58,535, in turn, would completely refute the bottom hypothesis.
In my view, current data points to a possible bottom-forming structure, but this is not a standalone buy signal. The market still needs confirmation from price and volume before a trend change can be discussed.