Bitcoin Recovery Stalls As HODLers Apply Selling Pressure
13 July 2024 - 8:00AM
NEWSBTC
On-chain data shows that Bitcoin long-term holders have potentially
been selling recently, something that may explain BTC’s continued
bearish momentum. Bitcoin Exchange Inflow CDD Has Registered Huge
Spikes Recently As an analyst in a CryptoQuant Quicktake post
explained, old cryptocurrency tokens have recently been deposited
in large quantities in centralized exchanges. The on-chain metric
of interest here is the “Exchange Inflow Coin Days Destroyed
(CDD).” A “coin day” refers to a quantity that 1 BTC accumulates
after staying dormant on the blockchain for 1 day. Related Reading:
Bitcoin Crash Forced Weak Hands Into Largest Loss-Taking Since 2022
Lows: Report When a coin that had been sitting still inside a
wallet is finally moved, its coin days counter naturally resets
back to zero, and the coin days it had been carrying before the
move are said to be “destroyed.” The CDD keeps track of the total
amount of coin days being reset in this manner across the network.
In the context of the current topic, though, the general CDD isn’t
the one of focus, but rather the Exchange Inflow CDD, which only
keeps track of the coin days being destroyed through transactions
into wallets connected to exchanges. Now, here is a chart that
shows the trend in the Bitcoin Exchange Inflow CDD over the past
month or so: As is visible in the above graph, the Bitcoin Exchange
Inflow CDD has registered some spikes of considerable scale this
month. This would imply that many dormant coins have recently seen
deposits into exchanges. Generally, spikes in the CDD correlate to
movement from the long-term holders (LTHs), as these HODLers tend
to accumulate large amounts of coin days. Therefore, the recent
spikes in the Exchange Inflow CDD suggest that these diamond hands
have been transferred to exchanges. Holders make transactions into
exchanges when they want to use one of the services these platforms
provide, which can include selling. The chart shows that the spikes
earlier in the month had come when Bitcoin had plunged towards its
lows, implying that the selling pressure from this cohort may have
played a role in the crash. The latest spike, larger in scale than
the others, has come while BTC has been trying to start a recovery
rally from these recent lows. So far, BTC has had no luck,
suggesting that the selling from the LTHs has potentially been
holding the coin back. Related Reading: Chainlink Traders
Capitulate After 10% Plunge: Bottom Here? It remains to be seen how
the Exchange Inflow CDD behaves in the coming days and if any
potential further spikes would impede Bitcoin in its path to
recovery. BTC Price At the time of writing, Bitcoin is trading at
around $57,900, up more than 4% over the past week. Featured image
from Dall-E, CryptoQuant.com, chart from TradingView.com
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Sep 2024 to Oct 2024
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Oct 2023 to Oct 2024