A historically reliable blockchain indicator suggests that bitcoin may be in the final stages of a downtrend, having lost nearly 40% of its value in the past two months.
- The Entity-Adjusted Dormancy Stream, a ratio of the cryptocurrency’s current market value to the annualized dollar value of coin dormancy, has fallen below $ 250,000. Dormancy refers to the average number of days each traded coin has been dormant or unchanged – an indicator of the spending trend of the market.
- The below $ 250,000 area has marked major price lows in the past, as shown in the featured image provided by data analytics company Glassnode.
- “Entity-adjusted dormancy flow recently hit an all-time low, showing a full reset of the metric. These events are historically imprinted at the lowest cyclical ” Glassnode said in a report released on Monday.
- “Low dormancy stream values indicate times when market cap is undervalued relative to the annual sum of achieved dormancy, indicating times when bitcoin is a valuable price,” added Glassnode.
- Market cap is calculated by multiplying the total number of coins mined by the price of a single coin at any given time. At the time of going to press, Bitcoin’s market cap was $ 809.98 billion.
- Bitcoin bottomed out in July 2021 and started a new bull run with the metric falling into the green zone. The cryptocurrency hit record highs of nearly $ 69,000 on November 10.
- While the indicator has turned bullish again, macroeconomic factors can play the spoiler. The December US Consumer Price Index is expected to be released at 13:30 UTC can inject volatility in the market. A higher-than-expected reading of 7.1% may prompt bet on a faster tightening from the US Federal Reserve and put further selling pressure on bitcoin.