Large dormant supply on the move

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On-chain data shows that a large amount of old bitcoin supply has moved over the past few days, which could be bearish for the price of the crypto.

2+ Year Bitcoin Supply Showed Movement Over the Past Week

As one analyst pointed out in an article on CryptoQuant, a total of four large transfers with an old bid took place in the past week. The relevant indicator here is the “Spent Output Age Bands” (SOAB), which tells us the total number of coins each age band is currently moving on the chain.

Age bands refer to supply groups divided according to the age of the parts (or more precisely of the UTXOs). For example, the 1m-3m age range includes all parts that have been inactive at the same addresses for at least 1 month and at most 3 months. The SOAB metric for this group would then measure the total number of these coins that have been transferred to another wallet.

Now, the age groups we are interested in here are the 2-3 year old and 3-5 year old groups. Typically, investors who have held their coins for more than 155 days are referred to as “long-term holders” (LTH), so these two bands include coins from two different LTH segments.

Moreover, it is a statistical fact that the longer investors hold their BTC, the less likely they are to sell at any time. This implies that holders of an offer as old as these bands would be among the most resolute HODLers out there.

Here is a chart that shows SOAB data for these two Bitcoin age brackets over the past week:

It looks like there have been several spikes in this metric in recent days | Source: CryptoQuant

As shown in the chart above, 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 age group, while one was from the 3-5 year age group.

The spike in this latest cohort was significantly larger than the others, accounting for over 15,000 BTC moved. All transfers from the 2-3 year age group combined reached almost 13,000 BTC, which is still lower than transactions from the 3-5 year age group.

Typically, large movements of such old Bitcoin supply are a sign of LTH dumping, and if this is the case here as well, it would mean that the current market has forced these so-called hands of diamond for sale.

The quant notes that these transfers were at least not directed to exchanges, which reduces the likelihood that these transactions were for the purpose of selling (but obviously does not eliminate the chances, because these investors could have simply sold via over-the-counter agreements).

Regardless of that, however, the analyst warns, “it’s very surprising to see FOUR of these trades in one week. Definitely worth watching in the next period.

BTC price

As of this writing, Bitcoin is trading around $16,700, up 1% in the past week.

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

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