Mean Dollar Invested Age: Dormant Coin Movement to Watch!
Mean Dollar Invested Age is a hidden indicator that is exclusive to Santiment, and it offers a ton of insight into when the next price shift is getting ready to strike.
According to our Santiment Academy page, Mean Dollar Invested Age is defined as the average age of all coins/tokens on the blockchain weighted by the purchase price. In other words, it's the average age of the dollars that are invested in a given asset.
When an asset's MDIA climbs, which is fairly normal on most days for a coin, then it means that the location of where the investments lie are becoming more and more dormant over time. If there is a long stretch (months at a time) where this metric continues to rise, this generally implies that there is some concerning stagnancy on that coin's network. And stagnancy makes it hard for prices to continue rising.
On the other hand, if we see an asset's MDIA starting to fall, this is an indication that previously dormant addresses are beginning to 'wake up' and move heavy amounts of coins that had been sitting for a while. This is the kind of signal you want to see if your portfolio is currently positioned as bullish, because these drops in Mean Dollar Invested Age generally work as validations that a price rise is much more likely to occur in the near future for that given asset.
As an example of how powerful this indicator can be, take a look at the 10-year Mean Dollar Invested Age for Bitcoin:
Now, of course keep in mind that this is a super long-term view. There are four distinct major dips in Bitcoin's Mean Dollar Invested Age highlighted, which each coincide with a major price rise afterward. There is one on the far left that isn't highlighted, but only because the major price rise in tandem with the MDIA dip in early 2013 is too hard to see due to the price line being so low on the axis.
Regardless, this above image gives you a clear illustration of what generally happens to an asset's price when its dormant addresses and investments begin to move, and the average amount of days the dollars are sitting in addresses becomes 'younger'.
On a more short-term time scale, there can still be quite a bit of power to this metric when we see a major dip in Mean Dollar Invested Age. And though majors like Bitcoin, Ethereum, and Cardano aren't showing anything out of the ordinary on this modest rise in July, there are several other well known assets that are seeing some movement.
Let's dive into a few of them:
XRP Network ($XRP)
XRP Network just saw its largest drop in Mean Dollar Invested Age since December, 2021. Back during that short-term, 5-day MDIA drop, the price of XRP surged +19%.
Litecoin's recent Mean Dollar Invested Age Drop from a couple days ago was a relatively minor one. However, for an asset that doesn't see a lot of dormant movement very often, any small drop is worth paying attention to. Its largest dormant move via its MDIA over the past year was from November 5th to 9th, and LTC jumped an incredible +50% during that 4-day stretch.
Yes, you're seeing this Mean Dollar Invested Age drop right for everyone's favorite crypto dog coin. The average investments in DOGE have gone from 264 days to just 207 between July 18th to July 21st (today). And the drop may not be done yet! Dogecoin looks like a good asset to keep an eye on, with its MDIA going all the way back to May levels in just a blink.
Yep, stablecoins matter too when it comes to dormant tokens moving. And no, it's not because its price is going to move the way we see in traditional crypto assets. But when we do see MDIA dropping for a major stablecoin like TUSD, it means there is either quite a bit of capitulation (which makes sense through 2022's bear market), or there is some increased buying power due to coins moving to exchanges. If we see another drop in TUSD or another stablecoin's MDIA the way we saw for TUSD in May, then this would be a very intriguing sign for all of crypto.
Staked Ethereum ($STETH)
Staked Ethereum isn't the kind of asset to see a ton of dormant tokens moving, but when it does it could be a good sign for Ethereum and ERC-20's in general due to coins becoming unstaked. Considering its MDIA line is either staying flat or moving down over the past month looks promising.
Consider adding Mean Dollar Invested Age into your lineup of metrics to check in on weekly to see when there may be something brewing for your favorite assets. We'll often see a few days of 'tapering off' on the MDIA line where prices haven't yet reacted. This makes this metric valuable for those looking for legitimate alpha in their trading. Stay tuned for an upcoming Sansheets model that many of you Sanbase PRO users will likely find particularly useful for catching these dormant token movements on many assets at the same time!
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
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