Recent data reveals a significant drop in Ethereum's dormancy flow, which may indicate a market bottom. We explore the implications and context of these changes.
Understanding Dormancy Flow
Entity-adjusted dormancy flow is the ratio of current market capitalization to annualized dormancy value (measured in USD). A value below 1 million indicates a positive sentiment among long-term holders who prefer to retain their assets.
What This Means for Ethereum
Current trends suggest that market sentiment reaches its lowest point at market bottoms, where pessimism peaks before price recoveries. Smart investors tend to accumulate Ethereum at certain price levels, leading to substantial growth. Data from Glassnode supports similar trends for Bitcoin.
Historical Perspective
The data presented by @ali_charts extends from 2016 to 2025, illustrating that market bottoms often occur whenever the dormancy flow drops below one million. However, this measurement should be complemented with other metrics for a comprehensive analysis.
Given the volatile nature of the cryptocurrency market, Ethereum may face substantial changes. Continuous analysis of network activity and transaction volume is crucial for understanding future trends.
