Active Addresses Ratio

Overview

Active Addresses Ratio monitors the percentage of addresses in a blockchain that are active in comparison to the total number of addresses with a balance.

This ratio highlights how active users of a blockchain are on average. In general, most crypto-assets see a declining trend in their long-term active addresses ratio, not because these networks are less active but because average addresses appear to simply hold these assets rather than use them on a recurring basis.

๐Ÿ’ก How can I use it?

Given cryptoโ€™s speculative nature, active addresses tend to spike along with prices. This is likely due to retail users following buying when prices are in an upward trend. As a result, the Active Addresses Ratio indicator can be helpful to assess the level of speculation in the market for a particular crypto-asset.

Ethereum Active Addresses Ratio

As you can see in the graph above, peaks in Ethereumโ€™s Active Addresses Ratio tend to coincide with peaks in ETHโ€™s price. Therefore, as an IntoTheBlock user, you can use this indicator to have a better understanding of when speculative trading is likely to be increasing to anticipate price drops and potential signs of a bubble.

Over the long-term (5-10 years) it is possible that this indicator becomes less related to price activity as more โ€˜organicโ€™ demand grows for crypto outside of price speculation.

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