Bitcoin News Today: Bitcoin Daily Active Addresses Drop 47.5% in July Amid Bear Market Fatigue and Layer-2 Growth

Bitcoin's daily active address count has experienced a notable decline in July, according to on-chain data shared by Santiment[1]. At the beginning of the month, the number of daily active addresses ranged between 570,000 and 800,000, indicating relatively strong user engagement. However, by July 31, this figure dropped significantly to approximately 380,000. In contrast, Ethereum maintained a stable active address count of around 511,000 throughout the same period, highlighting divergent user behaviors and network priorities between the two largest cryptocurrencies[1].

The drop in Bitcoin’s active addresses may reflect a combination of factors, including prolonged bear market fatigue, where investors are holding rather than transacting, and the consolidation of holdings into fewer, more secure wallets. Additionally, the maturation of Layer-2 solutions like the Lightning Network is likely playing a role, as more transactions are being processed off-chain, reducing the visibility of these activities on the base layer. Exchange activity, reduced onboarding of new users, and macroeconomic factors such as broader market uncertainty may also contribute to this trend[1].

Bitcoin daily active addresses are a key on-chain metric used to gauge network utility and adoption. A high number of active addresses typically signals strong engagement, with more users sending and receiving transactions. This, in turn, can indicate rising demand for block space and transaction fees. Sustained declines, however, may be interpreted as a sign of waning interest or a shift in user behavior, such as a preference for holding over trading[1].

Ethereum's stable active address count underscores the structural differences between the two networks. Ethereum’s broader utility—spanning decentralized finance (DeFi), non-fungible tokens (NFTs), and smart contract applications—creates a more consistent transactional flow compared to Bitcoin, which is primarily used as a store of value. Additionally, Ethereum’s transition to a proof-of-stake model and its staking incentives have contributed to a more engaged and stable user base[1].

For investors, the drop in Bitcoin’s active addresses should not be viewed in isolation. It is important to consider a range of metrics, including transaction volume, miner revenue, and the behavior of long-term holders. Layer-2 development and broader economic conditions, such as interest rates and geopolitical events, also influence on-chain activity. Analysts emphasize the importance of evaluating multiple data points to form a comprehensive understanding of the network’s health[1].

The divergence in on-chain behavior between Bitcoin and Ethereum in July suggests that different factors drive user engagement across the two blockchains. While Bitcoin faces challenges in maintaining active participation during bearish periods, Ethereum’s robust ecosystem continues to drive consistent transaction volumes. This contrast illustrates how varying use cases and technological advancements influence network dynamics[1].

A decline in Bitcoin’s active addresses does not necessarily indicate a loss of value or relevance. Rather, it reflects evolving user behavior and technological progress. The maturation of Layer-2 networks and the growing importance of off-chain transactions mean that fewer on-chain addresses may not equate to reduced network usage. Investors are encouraged to remain informed and adopt a long-term perspective, focusing on Bitcoin’s foundational value proposition as a decentralized digital asset[1].

Source: [1] Bitcoin Daily Active Addresses: Unveiling the Alarming Drop (https://coinmarketcap.com/community/articles/688bb29b7a64291cb173ebf8/)