Bitcoin user adoption looks to be gathering pace as its price rises amid a coronavirus-induced rush for assets with safe-haven appeal.
That number is now up 14% from the previous peak of 14.5 million reached in January 2018, soon after the cryptocurrency’s all-time price high of $20,000.
Essentially, there are now more addresses with a small balance than were seen at the height of the previous bull market.
The data suggests “a new bitcoin adoption cycle is brewing,” according to Lucas Nuzzi, network data product manager at crypto data provider Coin Metrics.
Address growth is not a precise indicator of bitcoin’s user base because a single individual or entity can hold multiple addresses.
Adoption has gone up by 27% in the 4.5 months since the major crash in mid-March.
Bitcoin’s price has rallied by over 200% during the same period, and is up 64% year to date.
Relatively scarce assets like bitcoin and gold seem to have benefited from fears of a dwindling U.S. dollar and the inflation-boosting policies of central banks and governments.
Some analysts expect bitcoin’s price to challenge record highs by the end of December.
Continued price gains could have an exponential effect on user growth as FOMO (fear of missing out) hits consumers.
Bitcoin may have a tough time scaling $12,000 in the short run if traders and crypto miners take advantage of the recent price rise and liquidate holdings.
As per Chainalysis Market Intel, 230,000 BTC (worth around $2.6 billion) with an on-paper profit of 25% or more were sent to exchanges last week.
It’s not known whether, or how many of, these coins were liquidated during Sunday’s sell-off.
Bitcoin is trading near $11,700 at press time, representing a 0.5% drop on the day.
Correction (13:10 UTC, Aug. 8, 2020): An earlier version of this article erroneously stated Lucas Nuzzi was from Messari. This has been corrected.