Bitcoin Adoption Stalls? New BTC Addresses See Sharp Decline Amid Market Volatility

With the general crypto market experiencing a bearish performance, Bitcoin‘s market dynamics and sentiment are shifting towards the negative side, hindering price movements. Following the waning market performances, investors are becoming skeptical about BTC’s prospects as the asset faces a decrease in fresh investors.

A Significant Drop In New Bitcoin Addresses

As the crypto market struggles with volatility, seasoned technical expert and investor Ali Martinez has identified a worrying shift among Bitcoin investors. In the past few weeks, BTC’s prices have been trending in a bearish manner, causing investors to adopt a cautious approach.

Specifically, the number of new BTC addresses has witnessed a sharp decline, hindering its network growth. This slowdown in adoption raises concerns about BTC’s capability to attract fresh capital and maintain broader adoption in the short term.

According to Ali Martinez, the monthly average of new Bitcoin addresses has fallen below the annual average, indicating a drop in its on-chain activity. He further highlighted that this trend is frequently linked to a reduction in network utilization and weakened network fundamentals.

Other factors that could be contributing to the drop are fluctuating market conditions and investors’ waning confidence in BTC’s future performance as seen among short-term holders. Short-term BTC holders appear to have sold some of their holdings due to waning price movements.

On-chain and technical analyst Darkfost reported that short-term holders realized significant losses in a single day. The expert unveiled the development after investigating the Bitcoin Short-Term Holder P&L to Exchanges in the 1-day time frame.

With these holders seeing substantial losses, this implies that many coins bought in the past few months are being sold at a loss. These short-term investors continue to feel the pressure of Bitcoin’s bearish trend, leading to panic selling.

Darkfost stated that these investors may have panic-sold some of their coins in response to the recent news about the Bybit hack during the weekend, which sent shockwaves in the entire crypto sector. However, he claims that capitulation events in the short term have usually signaled a local bottom.

Accumulation By Small BTC Addresses Declining

Recent volatile periods have also triggered a negative trend among wallet addresses holding less than 1 BTC, often regarded as small investors or shrimp addresses. Axel Adler Jr., a macro researcher revealed a notable decrease in accumulation among these small investors.

This decrease reflects a noticeable shift in retail investor sentiment and behavior as they are cautious about Bitcoin. Typically, retail investors accumulate coins during bull markets, but this is not the case right now.

In essence, this signals fading interest and confidence among these investors. Also, It implies that big or long-term BTC investors are driving the recent moves in the market.