Analysts Can’t Agree on What Prompted Big Spike in New Bitcoin Addresses
Bitcoin has seen a rapid rise in the creation of addresses on the blockchain so far this month, with one industry executive saying itÃ¢ÂÂs likely due to traders moving funds off the legally troubled BitMEX exchange. Others point elsewhere.
- The Ã¢ÂÂentities net growthÃ¢ÂÂ metric from analytics firm Glassnode, which measures the daily change in unique entities or clusters of addresses controlled by a single participant, rose sharply by 244% from 9,750 to 33,620 in the first six days of October.
- TuesdayÃ¢ÂÂs tally of 33,620 was the highest since Oct. 3, 2018.
- The surge in new entities noticeably picked up the pace in the wake of U.S. authoritiesÃ¢ÂÂ recent decision to bring civil and criminal charges against cryptocurrency derivatives trading platform BitMEX and usersÃ¢ÂÂ resulting panicked migration of funds to other exchanges.
- BitMEX has witnessed an outflow of at least 40,000 BTC (worth around $424 million at press time) since the charges were announced on Oct. 1.
- Many of these coins have migrated to addresses belonging to major exchanges like Kraken, Binance and Gemini, and a good number of these addresses have been newly generated, according to Alex Melikhov, CEO and founder of Equilibrium and the EOSDT stablecoin.
- Ã¢ÂÂThat has been a viable reason for the spike in new entities,Ã¢ÂÂ Melikhov told CoinDesk in a Telegram chat.
- However, on-chain analyst Cole Garner disagrees, saying the spike in new entities probably represents an entry of new investors into the market and has little to do with the BitMEX issue.
- ThatÃ¢ÂÂs because the metric has continued to rise over the past five days even though BitMEX withdrawals cooled following an initial spike from Oct. 1Ã¢ÂÂ2.
- Ã¢ÂÂIf BitMEX were responsible for address growth, the metric would have moved in lockstep with the outflow of funds from the exchange,Ã¢ÂÂ Garner tweeted Tuesday.
- Melikhov countered that bitcoinÃ¢ÂÂs flat price undermined that argument, adding, Ã¢ÂÂIf new investors entered market, the cryptocurrency would have rallied.Ã¢ÂÂ.
- A third theory making the rounds is that Chinese media's recent and unusual reports calling cryptocurrency the yearÃ¢ÂÂs best-performing asset maybe have caused local investors to put some cash into the bitcoin market.
- Melikhov said that was a more speculative theory.
- The cryptocurrency is trading near $10,600 at press time, having faced rejection near $10,800 on Tuesday.
- Disclosure: The author holds small positions in bitcoin and litecoin.
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