Entity-Adjusted Dormancy measures the average number of days destroyed per coin transacted, adjusted to account for entities rather than raw addresses. It reveals whether old, long-held coins are waking up and entering circulation.
Entity-Adjusted Dormancy measures the average number of days destroyed per coin transacted, adjusted to account for entities rather than raw addresses. It reveals whether old, long-held coins are waking up and entering circulation.
Bitcoin dormancy is calculated by dividing the total coin days destroyed in a period by the total volume of coins transacted. This yields the average "age" of coins being spent. Entity adjustment refines this by clustering addresses that belong to the same wallet or exchange, preventing internal transfers from distorting the metric.
When Entity-Adjusted Dormancy spikes, it means that very old coins are being moved — long-term holders or early adopters are transacting. During bull markets, rising dormancy can signal smart money distribution, as experienced holders sell coins they have held for years. During bear markets, dormancy spikes may indicate whales repositioning or consolidating rather than selling.
Low dormancy indicates that mostly young coins are circulating while old coins remain untouched. This is typically a healthy sign during accumulation phases, suggesting long-term holders are confident and only recent buyers are active. By tracking Entity-Adjusted Dormancy alongside price, analysts can distinguish between healthy market activity and late-cycle distribution by seasoned participants.
Entity adjustment clusters multiple Bitcoin addresses that likely belong to the same owner (such as an exchange's hot wallets) into a single entity. This prevents internal transfers between an entity's own addresses from being counted as real economic activity, producing a more accurate metric.
When dormancy rises during a price rally, it reveals that long-held coins are being spent — likely sold by experienced holders into market strength. This distribution by smart money has historically preceded cycle tops, making high dormancy a warning signal during euphoric phases.
Coin days destroyed is an absolute measure of total lifespan consumed by transactions. Dormancy normalizes this by dividing by transaction volume, giving the average age per coin moved. Dormancy is more useful for gauging holder behavior because it accounts for overall transaction volume.