Bitcoin and Ethereum activity declines as active addresses drop

Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) have experienced a steady decline in network activity throughout 2024, with fewer active addresses engaging on both blockchains.

Market expert Kyle Doops highlighted this trend on X (formerly Twitter), noting a persistent reduction in active addresses, signaling a potential slowdown in user participation and transaction volumes for the two cryptocurrencies.

The decrease in active addresses has been ongoing since the beginning of the year, despite expectations of a potential bull market.

Several factors, including market uncertainty and profit-taking due to price fluctuations, have contributed to this decline.

Fewer wallets are interacting with the networks, indicating a shift in investor behavior.

CryptoQuant, an on-chain analytics firm, also commented on the situation, stating that new investors have been slow to enter the market, even as interest grows around spot Bitcoin and Ethereum exchange-traded funds (ETFs).

The decline in active addresses suggests that the anticipated market excitement has not yet materialised, and there was no significant rally following the Federal Reserve’s initial rate cut.

The Fed’s continued quantitative tightening (QT), which reduces liquidity in the market, is seen as a contributing factor to the lack of growth in active addresses.

CryptoQuant anticipates that a return to quantitative easing (QE), which would inject liquidity into the market, could eventually lead to renewed market momentum and increased activity.

At the time of reporting, the Bitcoin price was $60,930.87, while the Ethereum price was $2,365.44.