Bitcoin To Dump Even Lower? This On-Chain Metric May Suggest It
09 November 2022 - 06:00AM
NEWSBTC
Bitcoin has sharply rebounded back to $20.4k, but is the decline
actually over? This on-chain metric may suggest otherwise. Bitcoin
Coin Days Destroyed Metric Has Spiked Up Over The Past Day As
pointed out by an analyst in a CryptoQuant post, BTC Coin Days
Destroyed is showing a spike 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. When the value of this metric is high, it means a
large number of dormant coins are being transferred on the chain
right now. This kind of trend can be a sign of dumping in the
market. Now, here is a chart that shows the trend in the 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 above graph, the Bitcoin Coin Days Destroyed has
observed a spike during the past day. In the last few weeks, there
have also been two other instances where the indicator has seen
surges of similar values. Related Reading: Bitcoin Bullish Signal:
Supply Reaches All-Time High HODLing Levels Following each of these
spikes, the price of the crypto has gone down, though the magnitude
of the decline has differed between each of them. Generally, such
large values of the CDD suggest movement from the long-term holders
(LTHs), a cohort that holds strong onto their coins for extended
periods. Because of this conviction, LTHs tend to accumulate a
large number of coin days, which is why when they move to sell
their coins, coin days in great quantities get destroyed, and the
CDD registers this as a spike. Related Reading: Bitcoin Price: Can
Cyclical Tools Predict The Next Bubble? | BTCUSD November 7, 2022
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. So far, the crypto has actually sharply
rebounded back up above $20k, but it remains to be seen if this
retrace will be short lived, or if the CDD will start to die off.
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
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