Bitcoin users’ new graphic is a sight to behold. Although the price of Bitcoin was horizontal there for a while, the network continued to grow. And with every new participant, the network expands infinitely. And with that, the value of the network increases in the same order of magnitude. This is the nature of the “network effect” phenomenon.
This is what this diagram by on-chain analyst Will Clemente shows:
The number of new users coming to the Bitcoin network continues to hit new all-time highs. pic.twitter.com/yttPlhJBPd
– Will Clemente (@WClementeIII) August 4, 2021
As one of the hosts on the Alt-Coin Daily show said, “Traders control the short-term market.” However, if we talk long-term, this is one of the most bullish charts you will see. And luckily for us, Clemente himself explained the nuances of the chart on said YouTube show.
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The whales hand out their coins
According to Investopedia, the Gini coefficient is:
The Gini index or Gini coefficient is a measure of the income distribution of a population that was developed in 1912 by the Italian statistician Corrado Gini. It is often used as a measure of economic inequality to measure the distribution of income, or less often the distribution of wealth, among a population.
Bitcoin’s Gini coefficient is getting healthier. According to William Clemente, if you filter out ETFs and grayscale, on-chain analysis shows that “over time, whales are just handing out their coins.” In his opinion, companies with less than 10 BTC never stop buying. “Since May 19, retail has been piling up more than the whales.” With each passing day, the “healthy distribution of the network” of Bitcoin gets better and better.
New Bitcoin users, a very nice looking chart
According to Clemente, his “very nice looking graph” shows “the net user growth of the network”. Its methodology is simple. He’s looking for “heaps of addresses that look like a person,” these are the entities. Then it subtracts “the number of new entities coming into the chain” from “the entities that appear to be inactive”. The result is new Bitcoin users every day.
As the graph clearly shows, we recently hit an all-time high in new Bitcoin users per day. But there is more. According to Clemente, the story lies in the “incremental increase between each mayor’s summit”. At the peak of 2011, 1,050 new users came online every day. In the two peak years of 2013, the number rose from 1,500 to around 5,000 per day. At the best moment of 2017, Bitcoin brought 40,000 new Bitcoin users every day.
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All of these peaks fell dramatically. If we look at 2021, it’s generally a “slow grind higher”. So, “If this is the peak, we haven’t seen this drop in new customer growth every cycle.” On the contrary, “we just passed the 2017 all-time high.” If Clemente is right, these new Bitcoin users mean we are nowhere near the top.
BTC price chart for 08/06/2021 on Bitstamp | Source: BTC/USD on TradingView.com
What are the big guys saying about Bitcoin users?
Legend has it that legendary investor Paul Tudor Jones once asked Stan Druckermiller:
“Do you know that when Bitcoin went from $ 17,000 to $ 3,000, 86% of the people who owned it at $ 17,000 never sold it?” Druckermiller replied, well, that was huge for me. So here is something with limited supply, and 86% of the owners are religious zealots.
Will the new Bitcoin users do the same when the bear season comes? Only time can tell.
Featured Images by History in HD on Unsplash - Charts by TradingView