On-chain data shows that long-term holders of Bitcoin have recently ramped up their sales, something that could lead to a further plunge in the crypto’s price.
Bitcoin Exchange’s CDD inflows have surged over the past day
As noted by an analyst in a CryptoQuant afterthe CDD’s current rise is the largest since October 6.
A “Coin Day” is the amount 1 BTC accumulates after standing still for 1 day at a single address. If a coin that has accumulated a certain amount of coin days ends up going to another wallet, the coin days counter is reset and the coin days are said to be “destroyed”.
The “Mint days destroyed(CDD) metric tracks the total number of Coin Days destroyed on a given day across the network.
Another version of this indicator is the “change inflow CDD”, which measures only those Coin Days that have reset due to transactions to centralized exchanges.
Now, here is a chart showing the trend in the CDD of Bitcoin inflows over the past month:
The value of the metric seems to have spiked up during the last day or so | Source: CryptoQuant
As you can see in the chart above, the Bitcoin exchange’s CDD inflows have shown a sharp increase in value recently.
There is a cohort in the BTC market called the “long-term holder(LTH) group, which includes all investors who hold their coins for long periods of time without moving them.
Related reading: Bitcoin capitulation deepens as aSOPR metric plunges to December 2018 lows
Due to the dormancy period of their coins, these LTHs accumulate a large number of coin days. As such, when these holders move their coins, the CDD usually rises due to the size of the Coin Days involved.
Thus, the current spike in Bitcoin CDD inflows suggests that some LTHs have deposited their coins to exchange wallets.
Since the exchanges in question are spot platforms, it is possible that this movement of coins has been made for selling purposes.
The chart shows that both of the previous major spikes in the indicator were followed by Bitcoin price declines.
If the last surge was also a result of LTHs preparing to dump their coins, then the crypto is likely to see a bearish trend this time as well.
BTC price
At the time of writing, Bitcoin’s price is hovering around $16.4k, down 2% over the past week. Over the past month, the crypto has lost 15% in value.
Looks like the price of the coin has been back to moving sideways in the last few days | Source: BTCUSD on TradingView
Featured image from Zdeněk Macháček on Unsplash.com, charts from TradingView.com, CryptoQuant.com