Definition ∞ Bitcoin dormancy refers to the duration a specific unit of Bitcoin has remained unspent since its last transaction. It is a metric used to gauge investor behavior and the flow of capital within the network. Analyzing dormancy patterns can provide insights into whether holders are accumulating, distributing, or holding their assets long-term, thereby influencing market sentiment and price action.
Context ∞ The current discussion around Bitcoin dormancy often centers on the increasing amount of Bitcoin held by long-term investors, a trend that could signal a potential supply shock if these holdings are eventually moved. Analysts closely monitor dormancy data to identify potential shifts in market supply dynamics, which are critical for understanding future price trajectories and overall network health.
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