The dormancy flow metric is an on-chain analytical indicator that measures the ratio of market capitalization to the cumulative value of all coin dormancy. This metric assesses the average time coins have remained unspent on the blockchain, providing insight into the behavior of long-term holders. A high dormancy flow suggests that older coins are moving, indicating potential profit-taking, while a low dormancy flow implies that older coins are holding, signaling accumulation. It offers a unique perspective on investor conviction.
Context
Crypto analysts frequently employ the dormancy flow metric to gauge market cycles and the conviction levels of long-term investors. Discussions often center on its predictive accuracy in various market conditions and its utility when considered alongside other on-chain data. Observing significant shifts in dormancy flow can provide signals regarding impending market reversals or the continuation of current trends.
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