Bitcoin addresses analysis
In this article, we will delve into the extent of Bitcoin's adoption by examining the rapid growth rate of its addresses. The number of Bitcoin addresses is a useful metric to gain insights into the network effect of Bitcoin, revealing how many people have adopted it.
Between January 3rd and January 8th, 2009, the total number of Bitcoin addresses and the total number of addresses with a balance remained at 1. On January 9th, the number of addresses with a balance jumped to 15, and by January 12th, 2009, there were 270 total addresses, 268 of which had a BTC balance and 2 addresses with a zero balance. It took 7 months before Bitcoin was first valued against the US dollar.
The above chart shows data from January 2009 to December 2013, which represents the first 4-year cycle of Bitcoin. All metrics show an upward trend. Even on this chart, we can see that the price of Bitcoin in US dollars is far more volatile than the number of Bitcoin addresses.
The number of total addresses starts at 1 and ends on 24,950,839 as of the 30th of December 2013. This is a growth factor of… wait for it: x24,950,839!!
The number of total addresses with a balance starts at 1 and reaches 1,658,237.
The number of total addresses without a balance starts at 1 and reaches 23,292,603.
The Bitcoin Price starts at $0.05 and peaks at $1,029.05 on the 25th of November 2013. That is a grwoth rate of x20,580!
Let's get serious.
We start to see a correlation between the number of total addresses and the number of addresses without a balance. These numbers increase far quicker than the number of addresses with a balance of BTC held in them. The total number of Bitcoin addresses will always be far higher than the number of people using the Bitcoin network because using BTC means each user will have multiple addresses, and each user can create as many BTC addresses as they wish.
Analysis
The number of total addresses starts at 25,449,899 and ends on 471,118,256 as of the 31st of December 2018. Growth factor of x18.
The number of total addresses with a balance starts at 1,707,675 and reaches 21,683,214. Growth factor of x12.
The number of total addresses without a balance starts at 23,742,225 and reaches 449,435,042. Growth factor of x18.
The Bitcoin Price starts at $946.08 and reaches at $3,873.53 on the 31st of December 2018. However it peaked at $17,292,75 on the 11th of December 2017. A growth rate of x18.
For the first time the price of Bitcoin spikes above the total number of addresses and the number of addresses without a balance. The volatility of the Bitcoin price is evident once again. Correlation between the total number of Bitcoin addresses and the total number of Bitcoin addresses without a balance remains constantly visable.
Analysis
The number of total addresses starts at 475, 747,499 and ends on 1,040,599,761 as of the 22nd May 2022. A growth rate of x2.19
The number of total addresses with a balance starts at 22,005,635 and reaches 41,982,384. A growth rate of x1.9
The number of total addresses without a balance starts at 453,831,634 and reaches 998,617,377. A growth factor of x2.2.
The Bitcoin Price starts at $3,659.89 and reaches at $19,432.12 on the 9th of May 2022. However it peaked at $65,218.33 on the 8th of November 2021. A growth factor of x17.8.
The total number of addresses doubles as does the total number of addresses without a balance.
Once again, the price volatility is considerably higher, reaching an increase of nearly x18 to reach the peak of $65k.
*The reason I have ended this cycle early is because the majority of the data is based on a weekly timeline however, the data from May 2022 switches to a daily time frame.
Analysis
The number of total addresses starts at 1,041,014,791 and ends on 1,233,621,688 as of the 7th of November 2023.
The number of total addresses with a balance starts at 41,963,499 and reaches 48,597,428
The number of total addresses without a balance starts at 999,051,292 and reaches 1,185,024,260
The Bitcoin Price starts at $19,008.96 and reaches at $35,233.85 on the 11th of November 2023.
Growth rate of all metrics continues to decline, however, the market is currently emerging from a period of depression. In the last bull run we can see BTC price jumping above total address data twice. Does this mean by projecting the future growth rate of BTC addresses we can project a future BTC price? I’ll leave that with you.
Summary:
Rapid Initial Growth: There was significant growth in all categories in the early years (2009-2013). This aligns with the early adoption phase of Bitcoin.
Stabilisation Over Time: After the initial phase, the growth rates tend to stabilise, showing a more gradual increase year-on-year. This could indicate a maturing market and wider adoption. It could price in institutional investors BTC adoption. Concurrently, it could represent a decl;ining interest in Bitcoin.
Fluctuations in Growth Rates: There are fluctuations in growth rates, particularly noticeable in the number of addresses with a balance. This could reflect changes in market sentiment, price fluctuations, and the evolving usage of Bitcoin.
Consistent Increase in Zero Balance Addresses: The number of addresses without a balance consistently grows, which might suggest that many addresses are created but not actively used for transactions.
Price volatility: Price volatility is declining, but at a far slower rate compared to BTC address data. The opportunity for good ROI remains.