A physical Bitcoin wallet. Source: Adobe

According to Glassnode data, the number of Bitcoin wallet addresses holding a non-zero balance could soon hit an all-time high, with the latest price rally that has seen the value of the world’s largest cryptocurrency jump nearly 40% this year seemingly drawing in new investors.

According to the crypto analytics firm, there were 43,525,546 Bitcoin addresses with a non-zero balance on the second of February, nearly 300,000 up versus this time last month. The record high number of non-zero addresses of 43,759,663 was hit in the immediate aftermath of the collapse of what had formerly been one of the world’s largest cryptocurrency exchanges FTX last November.  

At the time, this triggered a rush to withdraw crypto from exchanges, with many Bitcoin owners seemingly creating a self-custody wallet for the first time. However, capitulation as prices fell over the course of the following month resulted in non-zero address Bitcoin wallet numbers quickly declining back to their pre-FTX collapse levels.

But the recent recovery in non-zero address numbers suggests that, amid Bitcoin’s impressive rally since the start of the year, investors are once again returning to the Bitcoin market in greater numbers than they are leaving it. If the number of non-zero wallet addresses continues rising at the pace it has over the last few weeks, a new all-time high could be hit by the end of the month/by early March.

What Does This Mean for BTC?

Despite the bear market of 2022, the number of non-zero Bitcoin addresses continued to steadily rise. However, in past bull market cycles, such as in the run-up to the 2017 peak and in late-2020/early-2021, the pace of new non-zero address creation has been much higher.

In the absence of sustained rapid growth in the number of non-zero wallets, an indication that new investors are entering the market to pump prices, Bitcoin may struggle to gain further ground. Bitcoin bulls will thus be hoping that the latest rise in non-zero address numbers represents the start of a sustained increase, and that the prospect of Bitcoin being in the early stages of a new bull market will continue attracting new buyers.

Indeed, multiple separate on-chain leading indicators are all flashing bullish signs. As discussed in a recent article, seven out of eight key on-chain and technical indicators tracked by crypto analytics firm Glassnode’s “Recovering from a Bitcoin Bear” are now signaling that the next Bitcoin bull market might be here. Glassnode’s dashboard analyses whether Bitcoin is trading above key pricing models, whether or not network utilization momentum is increasing, whether market profitability is returning and whether the balance of USD-denominated Bitcoin wealth is in favor of the long-term HODLers.

However, things could be bumpy for Bitcoin in the near future. Bitcoin initially rallied in wake of a not-as-hawkish-as-feared Fed policy announcement on Wednesday, but a super-strong just released January US jobs report has rekindled bets that the US economy may ultimately avoid recession this year. That might mean the Fed lifting interest rates higher for longer, a prospect that could trigger some short-term profit-taking in Bitcoin.

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