3 Reasons Bitcoin Might Have Thawed This Crypto Winter


Bitcoin (BTC -3.06%), which is up more than 60% this year, just experienced its best week since December 2020. While stretches like this often lead investors to anticipate some sort of correction, there is plenty of reason to believe this might just be the beginning of a new bull market. 

Thankfully, because blockchains are open and transparent, data can be extrapolated to show activity. Three metrics derived from Bitcoin’s blockchain activity suggest that the worst of this most recent crypto winter might be in the rearview. 

Important indicators are back in bull market territory

Since a blockchain is essentially just a place for users to conduct transactions, it makes sense to measure activity by evaluating the number of new users and the number of transactions. From this angle, the simple concept of “more is better” generally applies.

When you take a look at both of these, one thing becomes clear — today they are at levels not seen since Bitcoin’s price was well within the territory of the previous bull market.

Rather than looking at the number of total addresses on the Bitcoin blockchain, it is more advantageous to measure the rate at which new addresses are joining. Based on recent data, the number of new addresses joining the network looks to be as high as it was in the spring of 2021, when Bitcoin went on a run to as high as $63,500. Coming in at roughly 122,000 new addresses per day, the current rate at which new entities are being added to the network is higher than on 90% of the days Bitcoin has been in existence.

With an increase in the number of users on the network, the number of transactions has skyrocketed as well. Similar to address growth, the number of transactions is at levels not seen since Bitcoin was near its all-time highs. Today the number of daily transactions is just shy of 310,000 and has averaged more than 8.5 million per month to start off 2023. The last time they were this high was in March 2021.

There is one more rather obscure metric that deserves to be brought up: miner revenue from fees. While this metric flies under the radar, profitability from fees (rather than the usual mining reward) typically reflects the state of the market as a whole. When profitability from fees is negative, Bitcoin has usually found itself in the midst of a bear market. But when profitability shifts, bull markets typically arrive — and for the first time since the summer of 2021, miners are in the green.

Making a game plan

Given these metrics, it’s difficult not to be excited about Bitcoin’s future. For the first time in almost two years, there is tangible reason to be optimistic that this crypto winter might be thawing. 

For prospective investors, though, there is even better reason to be excited. While address growth, the number of transactions, and miner revenue from fees are all at levels not seen since Bitcoin’s price was near $60,000, its price today is less than half of that. Should this momentum hold, buying Bitcoin today while its price is still well off its all-time high might turn out to be a lucrative decision. 

RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.


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