An analyst pointed out that two on-chain signals can be used to predict the fall of Bitcoin because they seem to have historically preceded drops in the price of the crypto.
Sales of 7- to 10-year-old coins have recently increased.
In a CryptoQuant post, an analyst pointed out that BTC dumping 7- to 10-year-old coins and ETH’s increasing dominance could be two signs to look for before a crash in the coin’s price.
The first indicator of importance here is the “Difference Age Bands” which examines the movement of coins in chains and tells us which age groups were responsible for them.
The various “coin age groups” in the market include coins based on the total amount of time they have been around before being moved or sold.
The group in question here is the “7 years to 10 years” group. The output chart for this group, therefore, shows how many coins have moved in this range that have been idle for the sessions. Here’s the graph for it:
The value of the metric seems to have spiked up in recent days | Source: CryptoQuant
As shown in the chart, the quant has marked important trend points for this Bitcoin indicator as well as the corresponding BTC price.
The analyst explains that whenever the cost in the 7-year to 10-year age band goes above 5000, BTC will show a downward trend in its price.
Out of the 7 times the signal has been seen in the past few years, the price has failed to go lower only once.
Ethereum dominance has also risen in recent weeks.
Another indicator that the analyst believes to be of note is “ETH Dominance”, which is a measure of Ethereum’s percentage share of the overall crypto market.
The chart below shows the trend in this dimension over the past few years.
Looks like the value of the metric has been high recently | Source: CryptoQuant
Ethereum’s dominance above the 20% mark seems to be a bearish sign for Bitcoin during this period.
In conclusion, the analyst suggests that proper use of these two indicators will help investors prepare for future downturns.
At the time of writing, the price of Bitcoin is hovering around $18.7k, down 16% in the last seven days. In the last month, the crypto price has lost 18%.
The chart below shows the coin’s price trend over the past five days.
BTC's value has plunged down over the last day | Source: BTCUSD on TradingView
Featured image from Bastian Riccardi on Unsplash.com, charts from TradingView.com, CryptoQuant.com