Dormancy Flow weighs what the market is worth against what the dormancy currently being cashed in is worth, which places it among the valuation tools rather than the behavioural ones. Both cycle floors and late-cycle overreach announce themselves on it.

The question underneath is whether the price the market is asking is supported by the age and value of the coins genuinely changing hands. When it is not, the reading moves to one end of its range, and historically one of those ends has been far more informative than the other.

What it actually measures

Two things are being weighed. On one side, what the market says the network is worth. On the other, the value being released as dormant coins move, which is a real observed flow rather than an opinion. The relationship between them describes whether valuation is running ahead of that flow or behind it.

Low readings describe a market that is cheap against the dormancy being realised. High readings describe the reverse, a valuation that has outrun the behaviour underneath it. The measure is smoothed rather than read daily, because a single large holder would otherwise throw the line around.

It is far better at bottoms than at tops

Its bottoms have landed inside bear-market floors with fair reliability across several cycles. Its peaks have been much less use at the other end, showing up too soon, refusing to leave through an advance, or never reaching an extreme at all before the market rolled over.

That asymmetry should shape how the reading is used. Treat a low as evidence and a high as context. A metric that is reliable at one end and unreliable at the other is still valuable, provided nobody pretends the two ends carry equal weight.

What it does not tell you

The historical sample is small. A handful of cycles is not enough to establish a level as a threshold, and each of those cycles ran under different market structure, different holder composition and different access to leverage. Bands drawn from that history are empirical and provisional.

It also gives no timing. Readings deep in the bottom of the range have persisted for months before a market turned, and staying there is not the same as turning. The metric describes a condition, and the date belongs to something else.

How to read it

Elevated. Market value is stretched against the dormancy being realised. Historically the weaker end of this signal, so read it as context.

Mid-range. Valuation and realised dormancy are broadly in proportion, with nothing extreme to act on.

Subdued. Market value is cheap against the dormancy being realised. Readings held here for weeks have clustered near cycle lows.

On the Dormancy dashboard, Dormancy Flow runs next to Reserve Risk, HODL Bank and MVOCD.

Common questions

What does Dormancy Flow compare?

What the market is worth, weighed against what the stored coin time currently being spent is worth. The question it settles is whether the price tag has any behaviour underneath it.

What has marked a bear-market floor?

A figure sunk deep into the low end of its range and staying there for weeks instead of grazing it once. Without the smoothing that pattern would be impossible to make out.

Is it better at tops or bottoms?

Floors, comfortably. The low end has landed inside bear-market bottoms with fair reliability while the high end has been much less dependable.

Why is it smoothed?

Because a single whale day would otherwise dominate the line. Smoothing turns an event log into something that can be read as valuation.

Can it be used to time an entry?

No. It describes a condition that can persist for months. Use it to say where in a cycle the market appears to be, not when it will move.