On-chain data shows that long-term Bitcoin holders have just increased their sales as the binary CDD metric rises.
Bitcoin Binary Coin Days Destroyed Observed an Increase
As one analyst pointed out in a post on CryptoQuant, long-term holders may use the recent surge as an opportunity to distribute their coins.
A “coin day” is said to be the amount that 1 BTC accumulates by standing still for 1 day. Thus, the total number of days of coins on the market refers to the total length of time that the supply of Bitcoin has been inactive.
Each time a part moves on the chain, the part days associated with it reset to zero. “Coin Days Destroyed” is an indicator that measures precisely this, for the entire market, on any given day.
Each time the value of this metric increases, it means that a large amount of dormant supply, probably belonging to long-term holders or “hodlers”, has just been sold or moved.
One way to interpret the data associated with this indicator is to use the “Binary CDD” metric. Here is a graph that shows the trend over the past year:
Looks like the value of this metric has spiked up in recent days | Source: CryptoQuant
What Binary CDD tells us is whether long-term Bitcoin holders are making more moves than average or not right now.
When the indicator value approaches 1, it means that LTH may be currently exerting selling pressure in the market. On the other hand, values pointing to 0 imply that LTHs are not moving as many coins at the moment.
Now, as you can see in the chart above, whenever the Binary CDD metric has seen rising values over the past year, the price of the crypto has generally seen a steep decline.
Recently, the indicator has seen its value increase again while the price of Bitcoin has also increased.
This could suggest that LTHs are using this price surge as an opportunity to reap profits by selling some of their coins.
Going by the past trend, this peak in Binary CDD could turn out to be bearish for the value of Bitcoin.
As of this writing, the price of Bitcoin is hovering around $21.7,000, up 9% in the past week. Over the past month, the crypto has lost 9% in value.
The chart below shows the BTC price trend over the past 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