On-chain data shows that Bitcoin Binary Coin Days Destroyed (CDD) has remained low recently. Here’s what it says about the current market.
Bitcoin Binary CDD Has Stayed At Very Low Levels Recently
According to data from an on-chain analytics firm Glassnode, this indicator reached a high value during the 2021 bull run. To understand the CDD metric, the concept of “coin days” must be looked at first.
Every time 1 BTC stays on the blockchain for 1 day, it accumulates 1 “coin day.” If a coin that has remained inactive in the network for a while, meaning it has accumulated a certain number of coin days, is now suddenly transferred, the coin days counter will naturally reset back to zero.
The days of the coin it once carried were said to be “destroyed.” The CDD indicator measures the total number of coin days reset across the network on any given day.
If this indicator has a high value, it means that many days the coin has been reset in the market today. Usually, this type of trend is a sign of movement from “long-term holders” (LTHs).
This group includes investors who have held their BTC since at least 155 days ago, so these holders tend to accumulate more days of the coin. For this reason, whenever they make transfers, the CDD registers a spike.
In the context of the current discussion, CDD itself is not of interest, but a modified version of it called Binary CDD. This indicator basically tells us how the current CDD compares to the historical average value of the metric.
As is evident from its name, this indicator can only achieve two values: 0 and 1. It has a value of 0 when the CDD is below the historical average, while it is 1 when the metric is above it. .
Now, here is a chart showing the trend of the 7-day average Bitcoin Binary CDD over the past 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 a relatively low value for a while. This suggests that there hasn’t been any significant disruption in the coin’s market days recently.
Naturally, this means that LTHs do not make any unusual movements, despite the price observing a remarkable increase in the last few months.
LTHs are generally the most determined group in the market, so moves from them can have important implications for the sector as it is a sign that even these holders may be forced to sell.
The Bitcoin bull run in the first half of 2021 saw the 7-day average Binary CDD remain close to 1, which means that LTHs are trading at full strength. Since this has not happened in the rally so far, it appears that the current profit is not enough to move these diamond hands, and they are probably waiting for better opportunities later.
These investors who continue to hold such a strong conviction will be beneficial for the price in the long term.
At the time of writing, Bitcoin is trading at around $27,300, down 1% from last week.
The asset continues to consolidate | Source: BTCUSD on TradingView
Featured image from Jievani Weerasinghe at Unsplash.com, charts from TradingView.com, Glassnode.com