For the month of October, Bitcoin has once again exceeded expectations. At the time of writing, the digital asset’s price has risen from its $40K lows to above $57K. Its recovery patterns show it on a path of least resistance back to the previous all-time high of $64,000. On-chain measures, on the other hand, have revealed even more positive tendencies among the asset’s investors.
The number of active users on the blockchain each day, or Bitcoin Active Entities; portrays a bright picture for the commodity in the future. Between May and September 2021, this indicator fell; approaching lows last seen in January 2020, when the bear market was still in full swing. Following the bull surge that began in early October; there has been a huge increase in the number of Active Entities on the blockchain.
Bitcoin Active Entities Up 19%
According to Glassnode data, the number of Bitcoin Active Entities has increased in recent weeks. Active Entities fell to just over 200K this year; a drop of more than 50% from their peak of over 400K between January and February 2021. As the asset’s price has begun to rise again, so has the number of Active Entities.
The significance of this is reflected in the price movement. The last time Active Entities experienced a significant increase; the market experienced a bull rally, putting the digital asset on a path to new all-time highs. While the increase in Active Entities may not be significant this time, it may still have the same market implications.
If history is any guide, the increase in Active Entities indicates renewed interest in the market. Returning interest, which frequently marks the start of a long bull rally, has always preceded a bull run.
More Bullish Signals
Active Entities isn’t the only metric that has risen. According to the same report, Glassnode, the average amount of Bitcoin being transacted is increasing. The median transaction size on the blockchain increased to 1.3 BTC; approaching the 1.6 BTC levels seen during the March 2020 liquidity crash.
One metric, like Active Entities, cannot predict how much an asset’s price will appreciate or depreciate. However; as the report points out; the increase in average transaction size indicates increased interest from institutional investors with more money to put into the market.
If the median transaction size is now more than 1.3 BTC; the dollar value of these transactions is more than $60,000. This type of money moving through the market indicates inflows from wealthy investors; which could push the value of the digital asset higher. However; it is also worth noting that institutional investors typically invest; when the market is on the verge of a bear market. As a result, these accumulation patterns may represent the start of a bear when institutions begin to fill their bags.