On-chain data shows Bitcoin long-term holders have just ramped up their selling as the binary CDD metric shoots up.
Bitcoin Binary Coin Days Destroyed Has Observed A Surge
As pointed out by an analyst in a CryptoQuant post, long-term holders may be using the recent surge as an opportunity to distribute their coins.
A “coin day” is said to be the amount that 1 BTC accumulates while sitting still for 1 day. Thus, the total number of coin days in the market refer to the overall time the Bitcoin supply has been dormant for.
Whenever any coin moves on the chain, the coin days associated with it turn back to zero. The “coin days destroyed” is an indicator that measures precisely this, for the entire market on any given day.
Whenever this metric’s value spikes up, it means a large amount of dormant supply, likely belonging to the long-term holders or “hodlers,” has just been sold or moved.
One way to interpret the data associated with this indicator is through the “binary CDD” metric. Here is a chart that shows the trend in it for the last one year:
Looks like the value of this metric has spiked up in recent days | Source: CryptoQuant
What the binary CDD tells us is whether Bitcoin long-term holders are making more moves than average or not right now.
When the indicator’s value moves towards 1, it means the LTHs are possibly putting selling pressure on the market currently. On the other hand, values pointing towards 0 imply LTHs aren’t moving that many coins at the moment.
Now, as you can see in the above graph, whenever the binary CDD metric has observed rising values during the past year, the price of the crypto has generally observed a sharp decline.
Recently, the indicator has once again seen an uplift in its value while the price of Bitcoin has also trended up.
This could suggest that LTHs are using this surge in the price as an opportunity to harvest some profit by selling off some of their coins.
If the past trend is anything to go by, this spike in the binary CDD could prove to be bearish for the value of Bitcoin.
At the time of writing, Bitcoin’s price floats around $21.7k, up 9% in the past week. Over the last month, the crypto has lost 9% in value.
The below chart shows the trend in the BTC price over the last five days.
The value of the crypto seems to have observed upwards momentum during the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com