Despite it feeling like crypto is struggling on life support, on-chain evidence from Glassnode suggests that there has been no meaningful reduction in the conviction of long term believers. For those that don’t know, Glassnode is a library full of interesting charts and data. For today’s intro, I am going to comment solely on their “Dormancy Metric.”
This metric tracks the average age of every Bitcoin that moves, determined by when it was mined. One of the ways to gauge the sentiment of long-term holders is to asses the average age of coins moving around the market. This is the “Dormancy Metric.”
A low value indicates a young age. These coins have not been dormant for long. A higher dormancy value indicates that the coins being traded have been around for a while hinting that long term holders have begun to “give up.”
According to Glassnode, the average age per BTC currently moving is at multi-year lows. The dormancy value is very low. Historically, dormancy values tend to decrease through bear markets and increase through bull markets. Whales hibernate in bear markets and do nothing. Bull markets occur when they wake up. The Dormancy Metric has been in a major bear market - which is good!
Although negative mainstream sentiment towards Bitcoin may make you think that falling prices have brought about increased selling of older coins, that simply isn’t the case.
Conviction of holders is stronger than ever.
It is quite clear that no widespread loss of HODLer conviction has taken place.
The decline in lifespan metrics actually bodes well for the longer-term, as it indicates old coins are stationary, and declining prices have little psychological impact on this cohort’s conviction.
If prices were climbing, this would be a very constructive signal, as it shows older coins are staying dormant. As it stands, however, this indicates the reverse, whereby prices are still struggling to hold the line even with older coins staying put in investor wallets.
This metric aggregates the total lifespan destroyed (in years) over the last 365-days, and similar to dormancy, low levels are usually constructive and typical of late-stage bear markets.
This is simply one metric, but an interesting one nonetheless.