Daily Active Addresses

Overview

The Daily Active Addresses indicator tracks the number of new addresses, total active addresses and zero balance addresses. These are defined the following way:

New Addresses

Newly created addresses that receive their first deposit in this particular crypto-asset.

Active Addresses (DAAs)

Addresses that made one or more on-chain transaction(s) on a given day.

Zero Balance Addresses

Addresses that transferred out (potentially sold) all of their holdings for this particular crypto-asset.

๐Ÿ’ก How can I use it?

DAAs are a helpful metric to track network activity over time. In general, growing DAAs signal greater blockchain usage, while declining DAAs point to lower demand for the network. DAAs tend to be correlated with price activity. As such, DAAs can often add as a leading indicator for price action as can be seen in the graph above.

โญ๏ธ Quick Tip: Growth in daily active addresses tends to be linked to increase in price as demand for network usage is directly related to demand for the blockchainโ€™s native token.

Additionally, it is worth monitoring how closely together DAAs and price movements are as a high relationship points to the likelihood of active addresses following price rather than using the crypto-asset.

New addresses are a proxy of new money coming into a crypto-asset. In certain cases this could be interpreted as a sign of optimism or potentially FOMO (fear of missing out). On the other hand, zero balance addresses are a proxy of money leaving a crypto-asset. They point to holders losing interest/belief in an asset or potentially acting with fear.

As shown in the graph above, new and zero balance addresses tend to move together. However, divergences between the two can be indicative of relative optimism/pessimism. For instance in late December 2019, the rise in new addresses could be seen as new investors buying or using a crypto-asset, which could be a bullish signal. On the contrary, greater zero balance addresses highlight pessimism or fearful behavior from holders as evidenced during the March 2020 price crash.

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