On-chain data shows that selling by long-term holders of Bitcoin may have been behind the recent dip in the crypto’s price below $19k.
Bitcoin Exchange Inflow CDD Recently Observed a Sharp Increase
As indicated by an analyst in CryptoQuant afterthere has been some potential selling pressure coming from the long-time owners recently.
The relevant indicator here is the Bitcoin “Coin Days Destroyed” (CDD). A coin day is defined as the amount accumulated by exactly 1 BTC when sitting idle for 1 full day. The total number of coin days in the market, therefore, represents the sum of time that each coin in the supply has been inactive.
When these previously sitting coins still show some movement, the coin days earned by them are said to be “destroyed” as they reset to zero. The total number of these is exactly what the CDD metric measures.
Now, because long-term holders keep their coins for long periods, they naturally accumulate significantly higher coin days than the rest of the market. As such, spikes in the CDD may be a sign of activity from this cohort.
Here is a chart that shows the trend in the Bitcoin CDD not for the entire network, but specifically for exchange 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, the Bitcoin exchange inflow CDD has seen a spike in its 14-day MA value just recently. This suggests that long-term holders have made some large deposits to exchanges over the last week.
In the past, such spikes in the exchange inflow CDD have usually been bearish for the price of the crypto because these investors usually deposit to exchanges for dumping purposes.
This time too, shortly after the indicator’s values rose, BTC observed a plunge from a local high of around $22.5k.
After this decline, however, the exchange flow CDD still did not decrease much and remained elevated. This could imply that LTH selling may have been the cause behind Bitcoin’s recent brief revisit below the $19k level.
At the time of writing, the price of Bitcoin is floating around $19.1k, down 12% in the last week. Over the past month, the crypto has lost 8% in value.
The chart below shows the trend of the coin’s price over the last 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