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On-chain data shows Bitcoin network metrics have diverged recently, with active addresses falling even as transaction volume shoots up.

Bitcoin Activity Metrics Are Showing A Mixed Picture

In its latest Market Pulse report, on-chain analytics firm Glassnode has talked about how a few different activity-related Bitcoin indicators have changed during the past week.

The first metric of interest is the “Active Address Count,” which measures, as its name suggests, the unique total number of addresses that are becoming involved in some kind of transaction activity on the blockchain every day.

Now, here is a chart that shows the trend in the Bitcoin Active Address Count over the last couple of years:

The value of the metric appears to have plummeted in recent days | Source: Glassnode’s Market Pulse – Week 34

As displayed in the above graph, the Bitcoin Active Address Count spiked above the high statistical band earlier in the month when the cryptocurrency’s price set a new all-time high (ATH) above $124,000. This suggests user participation rose with the rally.

With the price decline that has followed the peak, however, the indicator’s value has plummeted. The metric is currently sitting at 692,000, which is down 2.2% compared to last week. This value is also below the 712,000 low statistical band, indicating that trader attention in the cryptocurrency has taken an especially big hit.

While the Active Address Count has plunged, another metric, the On-Chain Transfer Volume, has gone up instead.

The trend in the BTC On-Chain Transfer Volume during the last two years | Source: Glassnode’s Market Pulse – Week 34

From the chart, it’s visible that the Bitcoin On-Chain Transfer Volume saw an uptick alongside the ATH break this month, but instead of cooling off with the price, the metric has only climbed higher since then.

The indicator has surged by 7.8% to $10.3 billion, which is above the high statistical band of $10.15 billion. But one question arises: if the number of users taking part in transfer activity has gone down as suggested by the trend in the Active Address Count, why has the On-Chain Transfer Volume gone up?

The answer is that, although both of these metrics relate to network activity, they correspond to different segments of the investors. Small hands significantly outweigh large entities in population, so the Active Address Count reflects the activity of the retail investors. On the other hand, whale transactions eclipse retail moves, so the On-Chain Transfer Volume is usually dominated by moves from big-money holders.

The divergence that has cropped up between the two Bitcoin indicators could signal that retail speculation has become muted after the price decline, while whales have ramped up activity to reposition themselves.

BTC Price

Bearish momentum has continued for Bitcoin during the last 24 hours as its price has slipped to $109,900.

Looks like the price of the coin has been sliding down over the last few days | Source: BTCUSDT on TradingView

Featured image from Dall-E, Glassnode.com, chart from TradingView.com

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