Definition. Dormancy Flow is the ratio between the value of a cohort's holdings and the rolling annual USD value of its coinday destruction, shown here per cohort: Entity-Adjusted aggregate (orange), Long-Term Holders (blue) and Short-Term Holders (red), plotted with price (grey). Dormancy Flow acts to create both a time and volume weighted oscillator which compares the weight of holdings to expended holding time.

Technical. Each trace divides the USD value held by the cohort by the trailing-year USD value of its dormancy:

• Dormancy Flow = Cohort Supply x Price / sum(Dormancy x Price, 365)

For the aggregate trace the numerator is the full Market Cap with entity-adjusted dormancy in the denominator; the LTH and STH traces use the respective cohort supply and cohort dormancy.

Interpretation.

• Low values of Dormancy Flow signal that the total value of supply held is low relative to the value of coinday destruction by that cohort. This is typical of low volatility, and low on-chain activity rates by that cohort.

• High values of Dormancy Flow signal that the total value of supply held is high relative to the value of coinday destruction by that cohort. This is typical of periods of high on-chain expenditure by that cohort.

Reading the cohorts side by side shows whose spending behavior is driving the aggregate: an elevated LTH trace flags heavy old-coin expenditure relative to LTH holdings, while the STH trace tracks the churn intensity of recent buyers.

Notes. Built from the entity-adjusted Dormancy family (LTH, STH), Market Cap, LTH Supply and STH Supply. The mean-reversion view of these series is charted at Dormancy Flow Momentum by Cohort, and the underlying cohort dormancy at Long- and Short-Term Holder Dormancy.