Dormancy

Definition ∞ Dormancy refers to the state of digital assets that have remained inactive in a wallet for an extended period. This metric is often used to gauge the long-term holding behavior of investors and the circulating supply dynamics of a cryptocurrency. High dormancy can suggest a strong conviction among holders, while low dormancy might indicate increased trading activity or active participation in network functions.
Context ∞ The analysis of asset dormancy is a key indicator for understanding market sentiment and potential future price movements, with researchers often tracking the age of coins moved on-chain. Discussions frequently involve differentiating between strategic long-term holding and assets lost due to forgotten private keys. Monitoring changes in dormancy can provide signals about investor behavior and the overall health of a blockchain ecosystem.