Summary
History shows that “active addresses” – ie the number of addresses actively trading Bitcoin – accurately identified the peaks in December 2017 and April 2021. This indicator also successfully identified that November 2021 was not a genuine Bitcoin top – from the lower number of active addresses.
For the next peak, it seems likely that the number of active addresses will be above the April 2021 peak of 1.3m addresses. Anything less than this number will give pause for thought.
Uses of the chart
As above, active address numbers have been good at identifying price peaks. So we should incorporate this into our thinking.
If other indicators – eg Short Term Holder Supply – suggests a peak is near, but active user numbers are low, this might lead us to question how near the peak we are.
Will it predict highs and lows?
Yes – it will help predict highs, as described above.