By: Isha Das
Understanding market trends and price dynamics is crucial for advanced crypto users. One method of doing this is by analyzing dormant Bitcoin supply, which is the percentage of circulating Bitcoin that has remained inactive for over a year. An interesting market principle to consider states that whenever the dormant supply of Bitcoin decreases, a major Bitcoin rally often follows.
As long-term holders begin to realize profits, the inactive supply decreases. This situation is enhanced when short-term holders start buying due to FOMO (Fear of Missing Out), triggering a surge in prices. These price increases invariably occur after the decline, not beforehand. Therefore, a sharp decrease in the 'Supply Last Active 1+ Year Ago' (SLA) metric is a key signal predicting the beginning of a market rally.
For instance, according to an article from November, it was noted that a significant shift in the SLA metric could foresee a burgeoning market rally. Meanwhile, Ethereum and Solana, two major crypto assets, were also on the rise.
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