gigisulivan2023-01-20

Bitcoin's Supply Adjusted Dormancy rapid rise, points to a likely sell-off

While a lot of on-chain metrics already moved off the bear cycle "bottom" areas, Supply Adjusted Dormancy (presented on the chart below as 100SMA) is one of those that could still hint an impeding sell-off and potentially a stronger one matching Nov 2018. We can see a move off lows in early Aug 2018 going steadily higher as BTC approached the final leg down 3 months later. Similarly in 2022 Dormancy started rising significantly of the lows from early October. Fast forward 3 months and we are potentially sitting right on a pivoting point as 100SMA clearly shows Dormancy is still on the rise and Bitcoin having trouble moving beyond 21.5k. It is not hard to find bearish catalysts with likely Chapter 11 filing for DCG/Genesis, stock market failing to break out of bearish trend and in general markets slowly realizing that maybe recession is not good news, as one could think looking at last few months and unexpected bullish reaction to any bad economic data. As mentioned in previous posts, there are a lot of conflicting indicators both on-chain/TA and in macro, so it will get only harder to assign probabilities to short term moves, but I think crypto market can't ignore stock market going down any longer especially if for example SPX closes below previous week's open price of 3910 tomorrow.