Dormancy Flow: Long-Term Holders as a Market Signal

What is Dormancy Flow? The metric divides the market value of all bitcoin by the yearly average of how much "rest time" the coins being moved bring with them, converted into dollars. When old holders move many long-dormant coins while the price falls, Dormancy Flow drops. When it reaches its lowest range, even patient holders have given up. David Puell introduced it in June 2019 as a tool for bear-market lows. In 2018 it caught the low well; in 2022 it called it ten months too early.

Most on-chain metrics on this site look at cost bases or age. The MVRV ratio compares market value with what all holders paid. SOPR shows whether moved coins are sold at a profit. The HODL waves show how old the resting supply is. Dormancy Flow asks a different question: how much rest time is being used up right now, and does the price fit?

Coin Days Destroyed: how rest time is measured

The foundation is one of the oldest on-chain measures there is. Every bitcoin earns one "coin day" for each day it is not moved. When it is spent, its accumulated coin days are "destroyed" and the clock restarts at zero.

This works because bitcoin consists of individual outputs, the UTXOs, each carrying the block in which it was created. How a transaction consumes old outputs and creates new ones is explained in How does a Bitcoin transaction work?.

The idea behind it: not every movement matters equally. If an exchange shuffles 10 BTC between its wallets five times a day, that is a lot of volume but almost no rest time. If someone moves 10 BTC that have sat in a hardware wallet since 2017, that destroys more than 30’000 coin days in one go. CDD therefore weighs the decisions of long-term holders far more heavily than everyday traffic.

Dormancy: the average rest time of moved coins

CDD on its own grows over time, because the older bitcoin gets, the more rest time can have accumulated. And CDD rises simply when more is moved. So it is divided by the amount moved. The result is called dormancy: how many days each moved bitcoin had rested on average.

In the example above: 50’015.5 ÷ 70.1 = about 713 days. Without the long-term holder it would be only about 0.3 days.

The independent researcher Reginald D. Smith described the metric in the journal "Ledger" (preprint December 2017, published 2018). In June 2019 Smith and David Puell took it up together and interpreted it like this:

• High dormancy: old hands are releasing coins. This happens mainly in late bull markets, when long-term holders take profits. The authors call it distribution.
• Low dormancy: mostly young coins are moving; the old ones stay put. This happens in bear markets and early bull markets. The authors call it accumulation: patient buyers take cheap coins and put them away.

One difference from the HODL waves: the waves show the stock, how old the resting coins are. Dormancy shows the flow, how old the coins waking up today are.

Dormancy Flow: market value against rest time used up

David Puell, whom you already know as co-author of the MVRV ratio, built a valuation metric on dormancy. His idea: convert dormancy into dollars (dormancy × price) and average it over a year. Divide the market value of all bitcoin by this yearly average and you get Dormancy Flow.

What the number expresses, in plain words:

• High value: market value is high relative to what old coins set in motion on a yearly average. According to Puell, a bull market is then "healthy": the price holds up without unusually many old coins pushing onto the market.
• Low value: market value has fallen while many old, valuable coins were moved in the preceding months. Puell calls the lowest range "full capitulation" and a historically good buy zone.

Because the denominator is a yearly average, the metric reacts slowly. It does not measure the day's mood like SOPR but whether the market has bled out over months.

What Dormancy Flow showed in 2018 and 2022

Puell introduced the metric in June 2019. His chart showed the lowest values near the earlier cycle lows, most recently the one of December 2018. To be fair about such hindsight: a metric built after the lows will naturally hit those lows. The real test is what came afterwards.

The test came in 2022. On 10 January 2022, Glassnode wrote in its weekly report "The Week On-chain" that entity-adjusted Dormancy Flow had bottomed out, showing a "full reset". Such events, it said, historically print at the cyclical bottom. CoinDesk picked this up two days later: the metric had dropped below 250’000, and that area had marked the major lows in the past.

On that 10 January the bitcoin price was $41’820. The low only came on 21 November 2022 at $15’784, 62 % lower. Anyone who had bet everything on the signal in January would have watched almost two thirds of the stake disappear over the following ten months. In the long run the January purchase was still good: on 12 November 2026 bitcoin stood at $71’461. But it was not a bottom signal.

Why was the metric off? One reason lies in the formula: the denominator contains the price of the past year. After a peak like November 2021, this yearly average is high even while the price is already falling. The denominator comes down slowly, the numerator immediately. So the metric drops early, already in the first half of a downturn.

Where Dormancy Flow gets fooled

Internal transfers look like sales. Puell and Smith themselves named the most important example: in December 2018 the exchange Coinbase moved almost 5 % of all bitcoin during an upgrade of its custody. To the blockchain it looked as if huge amounts of old coins were waking up. Glassnode's "entity-adjusted" version therefore filters out movements between addresses of the same party, as far as that can be estimated.

Large one-off events. In 2024 the trustee of Mt. Gox, the exchange that collapsed in 2014, distributed coins to creditors that had not moved for years. In July 2025 Galaxy Digital sold around 80’000 BTC on behalf of an early-era investor, some of it unmoved since 2011. Movements like these destroy billions of coin days within a few days and distort the yearly average for months.

ETFs and custodians. Since January 2024, large amounts of bitcoin sit with US spot ETFs. Buying or selling ETF shares moves no coins. Conversely, custodians move coins internally without anyone selling. The blockchain sees only part of the trading. The NVT ratio has the same weakness.

Lost coins. Some of the oldest coins will never move again. They accumulate coin days that are never destroyed. This disturbs dormancy less than realized cap, because only what is actually moved counts.

Dormancy Flow next to the Power Law zones

The site's valuation zones compare the price with a trend that depends only on time and divide the space around it into five zones from Floor to Euphoria. Dormancy Flow compares the price with the behaviour of long-term holders. How well do the two fit together?

Price, trend and floor from the site's daily data; Dormancy Flow according to Puell (2019) and Glassnode (January 2022). For the other days the sources give no value, and providers calculate differently.

The table shows the decisive difference. In January 2022, Dormancy Flow said "capitulation". The Power Law said: the price is at almost four times the floor and above the trend, nowhere near cheap. In November 2022 the price then sat on the floor. Anyone who laid the two measurements side by side had good reason for patience in January.

The roles differ:

• The Power Law tells you where the price stands. It gives a floor in dollars and euros that rises evenly every day. But it knows nothing about who is selling.
• Dormancy Flow tells you whether holders are giving up. It has no price floor, but it sees when old coins wake up en masse.

The picture was strongest where both coincided: price near the floor, Dormancy Flow in its lowest range. That was the case in December 2018. In 2022 the metric got there ten months before the price did. As of 12 November 2026 the price is at 0.66 times the trend, in the Accumulation zone. Where the zones are today:

How to use Dormancy Flow as a long-term holder

As a cross-check, not a starting gun. A low value means many old holders sold over the past year. Whether the price is already cheap is answered by the Power Law. Only when both say the same has the signal carried weight so far.

Deploy a reserve gradually. If you keep a reserve for bear markets, deploying it over several months is better than on one day with one signal. January 2022 shows why. What such a plan looks like is described in Buying bitcoin in a bear market. What an extra instalment near the floor has brought so far is worked out by the floor calculator.

Don't run your own old coins by the metric. When old holders sell, it feels like a warning. Mostly it just means that early adopters are funding their lives, settling estates or reallocating. Your plan should depend on your goal, not on other people's decisions.