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On this page
  • 📘 Dormancy Flow
  • 🔢 Formula
  • 🧭 What Is It Used For?
  • 🎯 Why It Matters
  • 🔍 What to Watch For
  • ⚙️ How It Works
  • 🧠 Strategic Interpretations

Dormancy Flow

PreviousDistribution by BalanceNextAbsolute Dormancy - Block Based (Raw CDD)

Last updated 1 month ago

📘 Dormancy Flow

What Is It?

Dormancy Flow is an advanced version of average dormancy that factors in market capitalization. It reflects the age of coins being spent relative to the total market size.

Think of it as: “Are old coins being moved in a way that’s significant compared to the size of the entire market?”

🔢 Formula

  • b_cdd: Total coin-days destroyed

  • b_val: Total coin volume moved

  • Market Cap: Total market value of all circulating coins

🧭 What Is It Used For?

  • Bottom Signal Detection: Historically, Dormancy Flow reaching extremely low levels (near historic bottoms) has marked excellent long-term buying opportunities.

  • Behavioral Risk Tracking: It shows when the spending of aged coins is dangerous to market stability relative to size.

  • Valuation-Based Sentiment Indicator: If Dormancy Flow is high → older coins are moving heavily compared to the market size If Dormancy Flow is low → low pressure from long-term holders

🎯 Why It Matters

Unlike raw or average dormancy, Dormancy Flow adjusts for how large the market is at that moment.

Example: 10M coin-days destroyed during a $100B market is very different than 10M destroyed during a $1T market. The latter is relatively insignificant—Dormancy Flow captures that nuance.

🔍 What to Watch For

  • Extremely Low Values: Indicates bottom-like behavior. Long-term holders are inactive, sentiment is cold.

  • Spikes During Uptrends: Older coins being sold into strength—possible early signs of distribution.

  • Rising Flow + Flat Price: Suggests internal rotation or hidden selling pressure.

⚙️ How It Works

  1. Calculate average dormancy (b_cdd / b_val)

  2. Normalize it by dividing by market cap

  3. Result is a dimensionless number indicating LTH activity in context

🧠 Strategic Interpretations

  • “Dormancy Flow is at historic lows. Similar levels in the past marked cycle bottoms.”

  • “Flow spiked during price consolidation. Smart money may be selling quietly.”

  • “Stable Dormancy Flow means LTHs are calm and not contributing to volatility.”