Bitcoin Bearish Signal: Large Dormant Supply On The Move

Keshav Verma

1 year ago

3 mins read

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On-chain data shows a large amount of old Bitcoin supply has moved in the last few days, something that could be bearish for the crypto’s price.

Bitcoin Supply Older Than 2 Years Showed Movement In The Past Week

As pointed out by an analyst in a CryptoQuant post, a total of four large transfers with old supply have taken place in the last week. The relevant indicator here is the “Spent Output Age Bands” (SOAB), which tells us the total number of coins that each age band is moving on the chain right now.

The age bands refer to supply groups divided based on the criteria of the age of the coins (or more precisely, of the UTXOs). For example, the 1m-3m age band includes all coins that have been sitting dormant inside the same addresses since at least 1 month ago and at most 3 months ago. The SOAB metric for this group would then measure the total number of these coins that have been transferred to another wallet.

Now, the age bands of interest here are the 2y-3y and 3y-5y groups. Typically, investors that have been holding their coins since more than 155 days ago are said to be the “long-term holders” (LTHs), so both these bands include coins belonging to two different segments of the LTHs.

Also, it’s a statistical fact that the longer investors hold onto their BTC, the less probable they become to sell at any point. This implies that the holders with such aged supply as in these bands would be some of the most resolute HODLers in the market.

Here is a chart that shows the SOAB data for these two Bitcoin age bands over the past week:

Looks like there have been multiple spikes in this metric in recent days | Source: CryptoQuant

As the above graph displays, there have been four large movements of coins belonging to these cohorts in the last few days. Three of these transfers were from the 2y-3y age band, while one was from the 3y-5y group.

The spike from the latter cohort was significantly larger than the others, amounting to more than 15,000 BTC being moved. All the transfers from the 2y-3y age band combined came to almost 13,000 BTC, which is still less than the 3y-5y group’s transactions.

Generally, large movements of such old Bitcoin supply is a sign of dumping from the LTHs, and if it’s the case here as well, then it would mean that the current market broke these so-called diamond hands into selling.

The quant notes that these transfers were at least not headed towards exchanges, which does reduce the probability of these transactions being for selling purposes (but obviously doesn’t eliminate the chances, as these investors could just have been selling through OTC deals).

Regardless of that, however, the analyst cautions, “it is very surprising to see FOUR of these transactions in one week. It is definitely worth watching in the next period.”

BTC Price

At the time of writing, Bitcoin is trading around $16,700, up 1% in the last week.

BTC seems to be continuing its sideways trend | Source: BTCUSD on TradingView

Featured image from Janko Ferlič on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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