On-chain data shows a large amount of Bitcoin supply dormant for more than 7 years ago has moved recently, a sign that may be bearish for the price.

As pointed out by an analyst in a CryptoQuant post, the movement of such an old supply has generally led to a drop in the price of the cryptocurrency in the past. The relevant indicator here is the “Spent Output Age Bands” (SOAB), which tracks the number of coins that each age band in the Bitcoin market is moving currently.

The “age bands” here refer to groups of coins divided based on how much time they have been sitting dormant inside a single wallet address. For example, the 1-day to 1-week band includes all tokens that haven’t been transferred on the blockchain since between one day and one week ago.

The SOAB for this specific cohort would measure the total amount of coins belonging to this age range that are being moved by their investors on the blockchain right now.

In the context of the topic at hand, the age band of interest is the 7-10 years cohort. Here is a chart that shows the trend in the SOAB for this particular group over the last few years:

As shown in the above graph, the Bitcoin SOAB for the 7-10 years age band has shown an extraordinarily large spike recently. This means that a large number of these super dormant coins have just been transferred between wallets.

Generally, when holders with such aged supply show some movement, it’s a possible sign that they are selling their coins. Naturally, this could have bearish implications for the asset’s value.

In the chart, the quant has highlighted the points where the 7-10 years Bitcoin age band has shown spikes of similar or larger scale during the last few years.

It seems like the cryptocurrency has usually observed the formation of local tops whenever the indicator has displayed such a spike in its value. The reason behind these highs looks to be at least in part the selling pressure put on the market by these investors.

Holders with such old coins are the most resolute bunch in the Bitcoin market, so they usually only sell in the most extreme circumstances. As these diamond hands may have sold recently, it can be a sign of wider mentality problems among investors.

If the historical instances of this trend are anything to go by, BTC may observe some drawdown from this selling soon. The analyst also notes, however, that the last occurrence of this trend, which was back in November 2022, didn’t cause any noticeable effects on the price.

This implies that there is a possibility that the current spike in the SOAB of this group may follow the lead of this previous instance instead, which if indeed so, would mean that Bitcoin doesn’t feel a bearish effect from this after all.

At the time of writing, Bitcoin is trading around $28,800, up 5% in the last week.

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