Coin Dormancy Flow

Definition ∞ Coin dormancy flow is an on-chain metric indicating the average number of days coins have remained unspent before being moved. This metric assesses the aggregate spending behavior of market participants, providing insight into the conviction levels of long-term holders. A low dormancy flow suggests older coins are being spent, potentially indicating profit-taking or capitulation. Conversely, a high dormancy flow implies that older coins are remaining static, reflecting holding sentiment. It is calculated by dividing the realized cap by the cumulative sum of daily dormancy values.
Context ∞ Analysts frequently cite coin dormancy flow in cryptocurrency news to interpret market cycles and predict potential shifts in supply dynamics. Observing spikes or troughs in this metric can signal periods of significant market distribution or accumulation. The utility of this indicator lies in its ability to offer a macro view of investor behavior beyond simple price action.