Spent Output Age Bands

Spent Output Age Bands Indicator

The Spent Output Age Bands (SOAB) is an on-chain metric that categorizes spent transaction outputs (UTXOs) based on the age of the coins involved. It provides insights into the activity of short-term versus long-term holders, allowing market participants to understand behavioral trends and potential market movements. SOAB is particularly valuable for identifying phases of accumulation, distribution, and capitulation.

Steps to Use the Spent Output Age Bands Metric

1. Understand the Concept

• Spent Output Age Bands: Tracks the age of UTXOs (coins) at the time they are spent and groups them into predefined age ranges (e.g., less than 1 day, 1 week–1 month, 1 year–2 years).

• Relevance: Provides insights into which holder groups (short-term vs. long-term) are active in the market and their impact on price trends.

2. Interpret the Spent Output Age Bands

• High Activity in Short-Term Bands: Indicates that short-term holders or recent buyers are dominating market activity, often seen during speculative phases or volatile markets.

• High Activity in Long-Term Bands: Suggests that long-term holders are taking profits or exiting positions, often observed near market tops or during capitulation events.

• Low Overall Activity: Reflects reduced market activity, often seen during accumulation phases or periods of consolidation.

3. Analyze Historical Patterns

• Market Tops: Spikes in long-term holder spending (older age bands) typically align with market tops, as these participants take profits during high prices.

• Market Bottoms: High activity in short-term age bands during downturns can indicate panic selling or capitulation by recent buyers.

• Accumulation Phases: Reduced activity across most age bands signals accumulation as holders prefer to retain their coins.

4. Make Decisions

• During Bull Markets: Monitor spikes in older age bands to anticipate potential market tops, as long-term holders may take profits.

• During Bear Markets: Increased activity in younger age bands can signal capitulation, presenting potential buying opportunities for long-term investors.

• During Sideways Markets: Observe overall age band activity to identify transitions between accumulation and distribution phases.

Tips:

• Combine with Other Metrics:

Use SOAB alongside metrics like Realized Cap for a comprehensive view of market sentiment and holder behavior.

• Track Long-Term Holder Behavior:

High activity in long-term age bands often signals significant market events, such as profit-taking during bull runs or capitulation during bear markets.

• Analyze Historical Trends:

Compare current SOAB patterns with historical data to identify recurring behaviors and their impact on market trends.

• Focus on Short-Term Activity:

Spikes in short-term age bands often indicate speculative behavior or panic selling, providing clues about short-term market volatility.

How to Use the Indicator Effectively

• During Market Tops: Increased activity in long-term age bands indicates profit-taking by long-term holders, often signaling a market top. These periods warrant caution and consideration of risk management strategies.

• During Capitulation Phases: High activity in short-term age bands during market downturns suggests panic selling by recent buyers, marking potential market bottoms and favorable conditions for accumulation.

• During Accumulation Phases: Reduced activity across all age bands reflects market stability and accumulation, providing opportunities for long-term investors to position for future growth.

Created By: This indicator is a widely recognized tool in blockchain analytics.