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On-chain data shows that the sale of long-term holders of Bitcoin may have been the cause of the crypto’s recent dip below $19k.
Bitcoin Exchange Inflow CDD Recently Observed a Sharp Rise
As noted by an analyst in a CryptoQuant afterthere has been some potential selling pressure from the long-term holders lately.
The relevant indicator here is the Bitcoin”Coin days destroyed” (CDD). A coin day is defined as the amount collected by exactly 1 BTC when you are inactive for 1 full day. The total number of coin days in the market therefore represents the sum of the time each coin in the supply has been dormant.
When these coins that had previously been sitting still show any movement, the coin days they won are said to be “destroyed” when they go back to zero. The total number of these is exactly what the CDD metric measures.
Now, since long term holders store their coins for long periods, they naturally accumulate significantly more coin days than the rest of the market. As such, peaks in the CDD may be a sign of activity from this cohort.
Here is a chart showing the trend in the Bitcoin CDD, not for the entire network, but specifically for inflow transactions:
Looks like the 14-day moving average value of the metric has been quite high in recent days | Source: CryptoQuant
As you can see in the chart above, Bitcoin exchange CDD inflows recently saw a spike in its 14-day MA value. This suggests that long-term holders have made some large deposits on exchanges in the past week.
In the past, such spikes in CDD inflows have usually been bearish for the price of the crypto, as these investors usually deposit into exchanges for dumping purposes.
Also this time, shortly after the values of the indicator rose, BTC took a plunge from a local high of around $22.5k.
However, after this decline, CDD inflows have still not fallen much and have remained high. This could mean that the sale of LTH may have been the cause of Bitcoin’s recent brief visit below the $19k level.
At the moment of writing, The price of Bitcoin hovers around $19.1k, down 12% over the past week. Over the past month, the crypto has fallen 8% in value.
The chart below shows the trend in the price of the coin over the past five days.
The value of the crypto seems to have already recovered back above $19k | Source: BTCUSD on TradingView
Featured image from Jason Hillier on Unsplash.com, charts from TradingView.com, CryptoQuant.com