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Bitcoin has bounced back strongly to $20.4k, but is the decline actually over? This on-chain statistic may suggest otherwise.
Bitcoin Coin Days Destroyed Metric Has Increased Over the Last Day
As noted by an analyst in a CryptoQuant afterBTC Coin Days Destroyed is currently peaking.
A “coin day” is the amount that 1 BTC accumulates after sitting still on the chain for 1 day. When a coin with a certain number of coin days shows any movement, the coin days are reset to zero and are said to be “destroyed”.
the “Coin days destroyed” (CDD) indicator measures the total number of such coin days currently being destroyed on the Bitcoin network.
When the value of this stat is high, it means that a large number of dormant coins are being transferred on the chain at the moment. Trends like this can be a sign of dumping in the market.
Here is a chart showing 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 chart above, the Bitcoin Coin Days Destroyed has seen a spike in the past day.
In the past few weeks, there have also been two other instances where the indicator has seen increases in similar values.
After each of these spikes, the price of the crypto has fallen, although the magnitude of the drop differed between each of them.
In general, such high values of the CDD suggest a movement of the long term holders (LTHs), a cohort that holds their coins for extended periods of time.
Because of this belief, LTHs tend to accumulate a large number of coin days. Therefore, coin days are destroyed in large quantities when they move to sell their coins, and the CDD records this as a spike.
So it’s possible it was this dumping of the LTHs that have led to those declines in previous cases.
In the past 24 hours, Bitcoin price plunged below $20k right after the CDD saw its rise, but as the chart shows, the stat is still unfinished.
So far, the cryptocurrency has in fact climbed sharply above $20k again, but it remains to be seen whether this retrace will be short-lived, or whether the CDD will begin to die.
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