📉 The Great On-Chain Mystery: Why Are Active Bitcoin Addresses Collapsing Despite Price Strength?

Since April 2021, the number of active Bitcoin addresses has been in a sustained, paradoxical decline, indicating a fundamental shift in market structure. Historically, bull phases are characterized by rising active addresses as retail participation peaks, followed by a decline during bear markets. This cycle, however, diverges dramatically.

Despite Bitcoin’s significant price recovery since 2022, active addresses have continued to plummet, nearing the lowest levels observed in this cycle. The count has nearly halved from its peak of 1.15 million in April 2021, settling around 680,000 today.

This secular downtrend suggests a profound evolution in how BTC is being used. Possible contributing factors include a growing cohort of investors transitioning into long-term holding, as evidenced by an increasing number of inactive addresses. More critically, this drop supports the thesis that a substantial segment of market exposure has migrated from decentralized on-chain activity to centralized alternatives (like institutional ETFs and regulated custodians), effectively sidelining organic network engagement. This shift is fundamentally altering the meaning of on-chain activity. $BTC