A concept often thrown around in the Crypto world is Metcalfe’s Law, which states that the value of a network increases as number of users increases. A chart comparing number of Bitcoin addresses used in the last 24 hours (BAU) vs. price (data pulled from Blockchain.info) seems to confirm this notion.
A few observations:
- Bitcoin adoption in the form of increased BAU on the blockchain seems to be a leading indicator of price growth.
- Incredibly, BAU mirrors the boom and bust cycle that BTC has experienced recently.
- If we look at the last time the BAU was this low, it was in August 2017 and the price was around $3,500, implying that this could be a floor for Bitcoin’s price, given that adoption doesn’t increase.
- When can we see then next bull run? If current price is less than 50 times the BAU (when the orange line is below the blue line in the chart), it has usually been a good time to buy.