Bitcoin Binary CDD Stays Low, Here’s What This Means
19 May 2023 - 4:00AM
NEWSBTC
On-chain data shows the Bitcoin Binary Coin Days Destroyed (CDD)
has stayed low recently. Here’s what this says about the current
market. Bitcoin Binary CDD Has Remained At Very Low Levels Recently
According to data from the on-chain analytics firm Glassnode, this
indicator attained high values during the 2021 bull run. To
understand the CDD metric, the concept of “coin days” needs to be
looked at first. Whenever 1 BTC stays stationary on the blockchain
for 1 day, it accumulates 1 “coin day.” If a coin that has remained
unmoved on the network for a while, meaning that it has accumulated
a certain number of coin days, is now suddenly transferred, its
coin days counter would naturally reset back to zero. The coin days
it had previously been carrying are said to be “destroyed.” The CDD
indicator measures the total number of coin days being reset
throughout the network on any given day. When this indicator has a
high value, it implies that a large number of coin days are being
reset in the market currently. Generally, this kind of trend is a
sign of movement from the “long-term holders” (LTHs). This group
includes investors that have been holding their BTC since at least
155 days ago, so these holders tend to accumulate large numbers of
coin days. Because of this reason, whenever they make transfers,
the CDD registers a spike. In the context of the current
discussion, the CDD itself isn’t of interest, but a modified
version of it called the Binary CDD is. This indicator basically
tells us how the CDD currently compares with the historical average
value of the metric. As is already obvious from its name, this
indicator can only attain two values: 0 and 1. It has a value of 0
if the CDD is below the historical average, while it’s 1 when the
metric is above it. Related Reading: Dogecoin, Shiba Inu Whales
Move Massive Amounts, Dumping Going On? Now, here is a chart that
shows the trend in the 7-day average Bitcoin Binary CDD over the
last few years: The value of the metric seems to have been low in
recent days | Source: Glassnode on Twitter As shown in the above
graph, the 7-day average Bitcoin Binary CDD has had a pretty low
value for a while now. This suggests that there hasn’t been any
significant destruction of coin days in the market recently.
Naturally, this means that the LTHs haven’t been making any moves
out of the ordinary, despite the price observing a notable increase
during the last few months. Related Reading: Bitcoin Bullish
Signal: Whales Accumulate 84,897 BTC The LTHs are generally the
most resolute bunch in the market, so transfers from them can have
significant implications for the sector since they are a sign that
even these holders may have been forced to sell. The Bitcoin bull
run during the first half of 2021 saw the 7-day average Binary CDD
stay near 1, implying that the LTHs had been selling in full force.
As this hasn’t been the case in the rally so far, it appears that
the current profits aren’t enough to move these diamond hands, and
they are likely expecting better opportunities later on. These
investors continuing to hold such a bullish conviction can be
constructive for the price in the long term. BTC Price At the time
of writing, Bitcoin is trading around $27,300, down 1% in the last
week. The asset continues to consolidate | Source: BTCUSD on
TradingView Featured image from Jievani Weerasinghe on
Unsplash.com, charts from TradingView.com, Glassnode.com
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