The Velocity indicator measures how frequently Bitcoin is traded overall, reflecting the overall speed at which it changes hands. Dormancy, however, measures how much Bitcoin moves after being held without movement for an extended period.
Since 2024, Velocity has remained near its lowest levels for almost a year. Even as the price rose from $35k to $73k, the flow of Bitcoin in the market did not increase significantly. Dormancy, however, spiked around March 2024, hitting a new all-time high (ATH), indicating that Bitcoin held for several years was being moved.
The fact that Velocity did not increase, despite the surge in Dormancy, suggests that investors are generally holding onto Bitcoin for the long term (HODL). However, with the significant price increase, some long-term holders did sell. This shows that while some movement occurred, the overall liquidity in the market remains low.
Written by Yonsei_dent
