On Nov. 10, 2021, (BTC) established an all-time high of over $68,600, On the same day, Ethereum (ETH) reached an all-time high price of $4,864.11,
The peak in the price of the two largest cryptocurrencies by market cap would lead investors to believe that the market was still experiencing a bull run. However, a close look at data on active addresses suggests the bear market could have started in mid-2021, months before BTC and ETH attained all-time highs.
Address analysis is a great approach to determine how well the ecosystem is being used or how active it is. For instance, the number of active BTC addresses topped 1 million during the 2017 bull run. However, data shows that as the bull run came to an end in 2018, the number of active BTC addresses decreased by about 50% to about 500,000.
Between 2018 and 2021, the amount of active BTC addresses slowly increased. The number of active BTC addresses lingered around 1.2 million between January and May 2021, surpassing it twice in the five months and rising as high as over 1.3 million.
However, in June 2021, the number of active Bitcoin addresses fell to a low of about 500,000, which may have signaled the beginning of the bear market. Following that, as BTC hit a new all-time high in November 2021, the number of active BTC addresses significantly grew. But despite the BTC price top, there were only about 1 million active addresses.
the number of active BTC addresses mostly stayed below 1 million during 2022. Through 2022, the number of new BTC addresses was largely constant at roughly 400,000. Over the previous five years, the number of new BTC addresses has stayed around to 400,000. However, the number of new BTC addresses reached a modest peak in early 2021 and exceeded 600,000.
Therefore, despite the fact that Bitcoin's price reached record highs in November 2021, basic analysis indicates that the bear market began months before.
Similar to Bitcoin, ETH active addresses see peaks during bull runs and declines and stagnation during bear markets that are on fire.
ETH active addresses experienced the biggest 2022 jumps after market collapses like the Terra-Luna scandal and the failure of FTX and Alameda Research. This might mean a number of things, including opportunistic investors buying the dip or new investors panic selling. It could also just mean the ecosystem is functioning in some way.
Similar to BTC, the number of new ETH addresses has stayed around 200,000 over the previous five years, barely exceeding it twice—in the beginning of 2018 and again around May 2021.