Bitcoin Bearish Signal: Supply Older Than 7 Years On The Move

Keshav Verma

1 year ago

3 mins read

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On-chain data shows a large amount of Bitcoin supply dormant for more than 7 years ago has moved recently, a sign that may be bearish for the price.

Bitcoin Supply Aged Between 7 And 10 Years Old Has Been Transferred Recently

As pointed out by an analyst in a CryptoQuant post, the movement of such an old supply has generally led to a drop in the price of the cryptocurrency in the past. The relevant indicator here is the “Spent Output Age Bands” (SOAB), which tracks the number of coins that each age band in the Bitcoin market is moving currently.

The “age bands” here refer to groups of coins divided based on how much time they have been sitting dormant inside a single wallet address. For example, the 1-day to 1-week band includes all tokens that haven’t been transferred on the blockchain since between one day and one week ago.

The SOAB for this specific cohort would measure the total amount of coins belonging to this age range that are being moved by their investors on the blockchain right now.

In the context of the topic at hand, the age band of interest is the 7-10 years cohort. Here is a chart that shows the trend in the SOAB for this particular group over the last few years:

Looks like the value of the metric has been quite high in recent days | Source: CryptoQuant

As shown in the above graph, the Bitcoin SOAB for the 7-10 years age band has shown an extraordinarily large spike recently. This means that a large number of these super dormant coins have just been transferred between wallets.

Generally, when holders with such aged supply show some movement, it’s a possible sign that they are selling their coins. Naturally, this could have bearish implications for the asset’s value.

In the chart, the quant has highlighted the points where the 7-10 years Bitcoin age band has shown spikes of similar or larger scale during the last few years.

It seems like the cryptocurrency has usually observed the formation of local tops whenever the indicator has displayed such a spike in its value. The reason behind these highs looks to be at least in part the selling pressure put on the market by these investors.

Holders with such old coins are the most resolute bunch in the Bitcoin market, so they usually only sell in the most extreme circumstances. As these diamond hands may have sold recently, it can be a sign of wider mentality problems among investors.

If the historical instances of this trend are anything to go by, BTC may observe some drawdown from this selling soon. The analyst also notes, however, that the last occurrence of this trend, which was back in November 2022, didn’t cause any noticeable effects on the price.

This implies that there is a possibility that the current spike in the SOAB of this group may follow the lead of this previous instance instead, which if indeed so, would mean that Bitcoin doesn’t feel a bearish effect from this after all.

BTC Price

At the time of writing, Bitcoin is trading around $28,800, up 5% in the last week.

BTC seems to have taken a sharp hit in the past two days | Source: BTCUSD on TradingView

Featured image from Hans-Jurgen Mager 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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