Dormancy Flow Suggests Buying Opportunity?

One of the glassnode on-chain analytics suggests that BTC is in a rare buying opportunity due to the “Entity-Adjusted Dormancy Flow.”

Dormancy is a lifespan indicator. It measures the average number of coin days destroyed on each transaction. High values suggest that there are a lot of coin days destroyed in each transaction, while low volumes mean the opposite.

To simplify, high values suggest that coins that previously had not moved for a long period of time are on the move and vice versa.

Entity-adjusted dormancy flow is a variation on this indicator that uses the ratio between the market capitalization and the aforementioned values. The indicator is used in order to predict market bottoms. In addition to this, it is used to determine if the long-term trend is bullish or bearish.

The recent reading on the chart above shows the lowest level…ever…at a point where bottoms in BTC were historically made.

We have a very WIDE high volume node from about 19k to 22k, which should provide great support now that the price is above that node, and if the price gets above that minor node at 24k, should be able to easily run up to about 28-29k.

It would also not surprise me to see the price fall back down into that major node at 20k though. That would not be a bad thing to help coil up energy for the next move.

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