On-chain analysis: Old coins move during ongoing rebound

Today’s on-chain analysis provides a look at the indicators for Bitcoin

(BTC). We look at the Average Spent Output Lifespan (ASOL) and Dormancy indicators to determine the age of coins that are currently moving in the market. Sponsored Sponsored Sponsored The

on-chain analysis

indicates that both indicators are giving signals that older coins have started to change owners. This has happened before during relief rallies and bounces.

ASOL

ASOL measures the average age of each issued transaction, not taking volume into account. This means that transactions of 1 BTC and 100 BTC that were previously dormant for the same number of days will have the same ASOL reading. This makes it different from CDD

, which takes volume into account. Sponsored

Nonetheless, a high ASOL reading usually means that a higher percentage of transactions on the network are old coins.

This indicator often increases during bounces. This was particularly evident in 2018, when it repeatedly bounced out while BTC was falling towards a bottom in December 2018.

In an ongoing bull market, it reached its then yearly peak at 92 on January 13, 2021. At the time, BTC was trading near $37,000, rebounding after an initial decline. This came after reaching the then all-time record high (ATH) of $40,771.

Furthermore, ASOL has once again shot upwards during the current bounce, which has been ongoing since the vicinity of $30,000. On August 19, the index reached a new one-year high at 107.

Judging by previous history, it is possible that this bounce is just a relief rally before the next decline.

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On-chain analysis: Old coins move during ongoing reboundAnaliza on-chain: ASOLChart courtesy of Glassnode

On-chain indicator: Dormancy

In a nutshell, on-chain analysis considers

the

Dormancy indicator

as the average number of days destroyed (days destroyed) per trading coin on a given day. This is calculated using the formula: Dormancy = Days Destroyed Coins/Transaction Coins.

Similar to ASOL, the Dormancy ratio reached an annual peak at 51.94 on January 7. BTC was then trading at $39,200.

Following the decline in c

eny and index, Dormancy rose again on July 31, reaching a new annual peak at 57.84. Compared to ASOL, both spikes occurred slightly earlier. Therefore, ASOL appears to be lagging behind Dormancy, while both indices are giving similar readings. On-chain analysis: Old coins move during ongoing reboundAnaliza on-chain: DormancyChart courtesy of Glassnode

For the latest analysis of Bitcoin (BTC) by BeInCrypto, click here.

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