Bitcoin is back at $20.4k. But, has the downturn really ended? The on-chain indicator may indicate otherwise.
In The Last Day, Bitcoin Coin Days Has Destroyed Metric
An analyst pointed out in CryptoQuant that BTC Coin Days Destroyed has been showing an increase at the moment.
A “coin day” is the amount that 1 BTC accumulates after sitting still on the chain for 1 day. When any coin with some number of coin days shows any movement, its coin days reset back to zero, and are said to be “destroyed.”
The “Coin Days Destroyed” (CDD) indicator measures the total amount of such coin days currently being destroyed on the Bitcoin network.
If this metric’s value is high it can indicate that a lot of unclaimed coins are being moved on the chain at the moment. This could indicate that there is dumping on the market.
Here’s a chart showing the Bitcoin CDD trend over the last month.
Source: CryptoQuant| Source: CryptoQuant
You can see that Bitcoin Coin Days Destroyed experienced a surge in its last day.
The indicator also saw two instances of surges in similar value over the course of the last week.
The price of crypto fell after each spike, although the severity of each decline was different.
These CDD values are generally high because they indicate movement by long-term holders (LTHs). This is a group that has held onto their coins for a longer time.
LTHs are prone to build up large amounts of coins days. This is why, when moving to sell their coin, they lose a lot of coin day. The CDD then registers it as a spike.
Thus, it’s possible that it was this dumping from the LTHs that lead to those declines in the previous instances.
In the last 24 hours, the Bitcoin price plunged below $20k right after the CDD saw its surge, but as is apparent from the chart, the metric still hasn’t winded off just yet.
Although the cryptocurrency has risen sharply above $20k so far, it’s not clear if this rebound will continue or if CDD will die.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com