Bitcoin is Bullishly Back at $20.4k, But Is the Fall Really Over? This on-chain metric may suggest otherwise.
The bitcoin coin destroyed days metric has risen in the past days.
As told by an analyst at Cryptoquant PostBTC Coin Days Destroyed is currently showing a spike.
A “coin day”—the amount that 1 BTC accumulates after sitting on the chain for 1 day. When a coin shows any movement with a coin of certain days, its coin days drop back to zero, and are said to have been “destroyed”.
The “Coin Days Destroyed” (CDD) indicator measures the total amount of such coin days currently being destroyed on the Bitcoin network.
When the value of this metric is high, it means that a large number of inactive coins are currently being moved in the chain. Such a trend could be a sign of dumping in the market.
Now, here is a chart that shows the trend in Bitcoin CDD over the past month:
The value of the metric seems to have been quite high over the last twenty-four hours | Source: CryptoQuant
As you can see in the graph above, the bitcoin coin days destroyed have been bullish in the past.
Over the past few weeks, there have also been two other instances where the indicator has seen an increase of similar values.
After each of these spikes, the price of the crypto has plummeted, although the amount of the decline differs between each of them.
Generally, such large values of CDDs suggest movement from long-term holders (LTH), a group that is strong on their coins for extended periods of time.
Because of this belief, a large number of coin days are accumulated in LTH, which is why when they proceed to sell their coins, a large amount of coin days are lost, and the CDD tends to spike it. registers as.
Thus, it is possible that this dumping from LTH caused the decline in the previous examples.
Over the past 24 hours, bitcoin price dropped below $20k right after the CDD rise, but the metric is still not closed as it is clear from the chart.
So far, the crypto has indeed made a bullish rally above $20k, but it remains to be seen whether this retrace will be short-lived, or if the CDD will start to die down.
BTC has sharply surged up in the last few hours | Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com