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Bitcoin Bearish Signal: Large Dormant Supply in Motion

On-chain data shows that in recent days, a large amount of old Bitcoin-Supply has moved which could be bearish for the price of the crypto.

Bitcoin supply, which is more than 2 years old, has shown movement over the past week

As one analyst pointed out in a CryptoQuant post, a total of four major transfers involving old holdings took place in the last week. The relevant indicator here is the Spent Output Age Bands (SOAB), which gives us the total number of coins each age band is currently moving on the chain.

The age groups refer to offer groups that are divided according to the criteria of the age of the coins (more precisely the UTXOs). For example, the age group of 1 to 3 million includes all coins that have been dormant in the same addresses for at least 1 month and at most 3 months. The SOAB metric for that group would then measure the total number of those coins that were transferred to another wallet.

Well, the age groups of interest here are the 2-3 year old and 3-5 year old groups. Typically, investors holding their coins for more than 155 days are referred to as “Long Term Holders” (LTHs), so these two bands contain coins belonging to two different segments of the LTHs.

Also, it is a statistical fact that the longer investors hold their BTC, the less likely it becomes that they will eventually sell. This implies that with an offering as old as these tapes, holders would be some of the most determined HODLers out there.

Here’s a chart showing the SOAB data for these two bitcoin age groups over the past week:

Bitcoin Bearish Signal: Large Dormant Supply in Motion, Crypto Trading News

It looks like there have been multiple spikes in this metric over the past few days | Source: CryptoQuant

As the chart above shows, there have been four major movements of coins belonging to these cohorts over the past few days. Three of these transfers were from the 2-3 year old age group, while one was from the 3-5 year old group.

The peak of the latter cohort was significantly larger than the others, amounting to more than 15,000 BTC moved. All transfers from the 2-3 year old age group combined amounted to almost 13,000 BTC, which is still less than the transactions from the 3-5 year old group.

In general, large movements of such old bitcoin supply are a sign of dumping from the LTHs, and if that is the case here, it would mean that the current market has prompted these so-called diamond hands to sell.

The quant notes that these transfers were at least not directed to exchanges, which reduces the likelihood that these transactions are for sale purposes (but obviously doesn’t eliminate the chances since these investors could only have sold through OTC deals).

Regardless, however, the analyst warns, “It’s very surprising to see FOUR of these transactions in one week. Definitely worth checking out in the near future.”

BTC price

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

Bitcoin Bearish Signal: Large Dormant Supply in Motion, Crypto Trading News

BTC seems to continue its sideways trend | Source: BTCUSD on TradingView Featured image by Janko Ferlič on Unsplash.com, Charts by TradingView.com, CryptoQuant.com

Source: Crypto News Deutsch

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