Briefing
The core insight is that Bitcoin’s oldest and most experienced investors are accelerating their distribution, a behavior that historically precedes a market cycle peak. This suggests the market is in a high-friction zone where veteran supply is actively being sold into new demand. The most important data point confirming this thesis is the Dormancy Z-score, which peaked in April 2024, a level that has historically preceded the final market cycle top by approximately three months.
Context
The primary market uncertainty is whether the current price volatility is a healthy mid-cycle shakeout or if the bull market is structurally running out of steam. Investors are wondering if the recent price inability to achieve new highs is simply a consolidation phase or a sign that the most patient holders are finally selling their supply.
Analysis
The Dormancy Flow Z-score is a metric that gauges the average age of coins being spent on the network relative to the overall trend. When this metric rises, it signals that older, long-term held coins are moving, which is the signature of veteran profit-taking. The recent peak in this Z-score, combined with a dramatic increase in the volume of 7-10 year old coins being spent, confirms that the most patient holders are selling into the current price strength. This pattern indicates a major supply transfer from “strong hands” who held for years to newer market participants, a classic hallmark of a distribution phase nearing a cycle top.
Parameters
- Dormancy Flow Z-score Peak → Peaked in April 2024, indicating the highest average age of spent coins in the recent period.
- Historical Precedent → Peaks in the Dormancy Z-score have historically preceded cycle tops by about three months.
- Distribution Cohort → A dramatic increase in 7-10 year Spent Volume was observed in 2024, confirming the movement of very old supply.
Outlook
This signal suggests the market will face increasing supply pressure in the near term, requiring a period of consolidation or correction to fully absorb the veteran selling. This distribution phase indicates that the easy part of the bull market is over, and the path forward will be characterized by greater price friction. A key confirming signal to watch for is a significant drop in the Short-Term Holder Realized Price, which would indicate that new buyers are capitulating, a necessary step to clear the market for the next leg up.
Verdict
The market is in a structural distribution phase driven by veteran investors, signaling the cycle peak is likely near.
