The number of active bitcoin addresses has rebounded to near-record highs, new data shows

El Salvador bitcoin

The number of active bitcoin addresses rebounded to near-record highs, driven partially by El Salvador’s passage of a law that makes it the first country to accept the digital currency as legal tender.

According to Glassnode data, on May 8 there were roughly 1.229 million active bitcoin addresses. That’s just under 15,000 addresses away from the January 8 all-time record of 1.243 million.

Glassnode chart bitcoin adresses 2

During the recent bitcoin sell-off, active bitcoin addresses fell dramatically, but now, as bitcoin’s price has stabilized, there’s been a resurgence in the number of active addresses on the network.

According to Glassnode, the rise in bitcoin addresses is a common “characteristic of bull markets” as the number of addresses rises when there is “strengthening demand for on-chain transactions, value settlement, and urgency for inclusion in an upcoming block.”

Bitcoin has been on a wild ride of late. The price of the digital asset reached an all-time high on April 15 of over $63,500 per coin before bearish news pulled the price down.

From Tesla’s u-turn on accepting bitcoin as a payment to concerns about the digital currency’s environmental impact, there was a flurry of bearish signals that hurt bitcoin.

Now though, the digital currency seems to have regained some of its previous luster after landing support at the soldout Bitcoin 2021 Miami conference and from El Salvador’s President Nayib Bukele.

Bukele sent a bill to El Salvador’s congress asking to make bitcoin legal tender in the country this week, and the bill was passed with a supermajority (62 out of 84 votes).

Nicholas Cawley from DailyFX told Insider that making Bitcoin legal tender “will help the remittances trade in El Salvador, for people sending money back to the country.”

The strategist said that “if this proves successful then the other big remittance markets including Mexico will be very interested onlookers.”

Read more: Forget bitcoin and other hypervolatile cryptocurrencies. For everyday transactions, the future of money is stablecoins.

Inflation concerns could also be helping bitcoin regain its prominence as digital assets are often viewed as a way to protect capital from inflationary pressures.

Google Trends data shows terms relating to inflation have seen skyrocketing search volume over the past month as market commentators continue to question whether current inflationary forces are truly “transitory” as the Fed describes.

Wharton professor Jeremy Siegel even said inflation could spike to 20% in the next few years in a recent interview with CNBC.

If inflation does spike and investors seek uncorrelated stores of value, bitcoin could end up gaining even more traction.

Read the original article on Business Insider