An analyst has suggested that two on-chain signals may be used to predict Bitcoin falls as they seem to have historically preceded drops in the crypto’s price.
Bitcoin Sale of Old Coins 7yrs-10yrs Recently Spiked Up
As pointed out by an analyst in a CryptoQuant post, BTC dumping of coins aged between 7 years to 10 years and ETH dominance rising up can be two signs to look for before falls in the coin’s value.
The first indicator of relevance here is the “Spent Output Age Bands,” which checks for on-chain movement of coins and tells us which age groups were responsible for them.
The different “coin age groups” in the market include coins based on the total amount of time they were sitting idle for before being moved or sold.
The group in question here is the “7 years to 10 years old” cohort. Accordingly, the Spent Output chart of this group shows how many coins have been moved after they were left idle over this time period. The graph is here:
Recent days have seen a significant increase in the value of this metric. Source: CryptoQuant| Source: CryptoQuant
The chart shows that the quant marked both the trend points for the Bitcoin indicator and the price of the BTC in question.
According to the analyst, BTC tends to lose value when the spend of children aged 7-10 years exceeds 5000.
Only one of 7 signals that were seen in the past few years did not show a price drop.
Recently, Ethereum Dominance also grew in the last week
The other indicator that the analyst believes to be of note is the “ETH dominance,” which is a measure of the total crypto market cap percentage share for Ethereum.
Below is a chart that shows how this measure has changed over time.
The metric seems to have a high value recently. Source: CryptoQuant| Source: CryptoQuant
The Ethereum dominance above the 20% mark seems to have been a bearish indicator for Bitcoin in this time.
The analyst concludes that investors can prepare for future downtrends by using these indicators together.
At the time of writing, Bitcoin’s price floats around $18.7k, down 16% in the last seven days. The crypto’s value has fallen 18% over the past month.
The chart below shows how the currency’s price has changed over the course of five days.
Source: BTCUSD tradingview| Source: BTCUSD on TradingView
Bastian Riccardi's featured image, Unsplash.com charts, TradingView.com charts, CryptoQuant.com