Data on the chain shows that long-term Bitcoin holders have just increased their sales as the binary CDD metric rises.
Bitcoin Binary Coin Days Destroyed has seen a surge
As pointed out by an analyst in a CryptoQuant to sendlong-term holders could 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. Therefore, the total number of days of coins on the market refers to the total time that the Bitcoin supply has been inactive.
Each time a coin moves on the chain, the days of the coin associated with it return to zero. The “days of destroyed coins” is an indicator that measures just that, for the entire market on any given day.
Whenever the value of this metric increases, it means that a large amount of dormant supply, possibly belonging to 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 graph showing the trend of the last year:
Looks like the value of this metric has spiked up in recent days | Source: CryptoQuant
What the binary CDD is telling us is whether long-term Bitcoin holders are making more moves than average or not right now.
When the value of the indicator moves towards 1, it means that LTH is currently exerting selling pressure on the market. On the other hand, values pointing towards 0 imply that LTH is not moving 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 cryptocurrency has generally seen a steep decline.
Recently, the indicator has once again seen an increase in its value while the price of Bitcoin has also been on an upward trend.
This could suggest that LTHs are using this price hike as an opportunity to reap some profit by selling some of their coins.
If the past trend is anything to build on, this spike in the binary CDD could prove bearish for Bitcoin’s value.
At the time of writing, Bitcoin’s price is hovering around $ 21.7k, up 9% over the past week. Over the past month, the cryptocurrency has lost 9% in value.
The chart below shows the price trend of BTC 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