A dormancy flow spike indicates a sudden, significant increase in the movement of previously inactive cryptocurrencies. This metric measures the ratio of market capitalization to annualized dormancy, highlighting periods when older coins are being spent. A spike suggests that long-term holders are moving their assets, potentially to sell them. Such activity can signal a change in market sentiment or a distribution phase by experienced participants.
Context
In crypto news, a dormancy flow spike is often discussed as a precursor to significant price volatility or market reversals. The situation involves interpreting whether the movement of old coins signifies profit-taking at market highs or capitulation during declines. Observing this metric provides crucial context for understanding the intentions of long-term holders and anticipating market movements.
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