On-chain data shows that Bitcoin long-term holders have increased their sales recently, something that could lead to a further plunge in the crypto’s price.
Bitcoin Exchange Inflow CDD Increased Over The Last Day
As indicated by an analyst in CryptoQuant afterthe current rise in the CDD is the biggest since October 6th.
“Coin Day” is the amount that 1 BTC accumulates after remaining stationary for 1 day in a single address. If a coin that has accumulated a certain number of Coin Days finally moves to another wallet, its coin days reset, and the Coin Days are said to be “destroyed”.
The “Coin Days Destroyed” (CDD) metric keeps a record of the total number of such Coin Days destroyed across the network on any given day.
Another version of this indicator is the “exchange inflow CDD”, which measures only those Currency Days that have been reset due to transactions to centralized exchanges.
Now, here is a chart that shows the trend in the Bitcoin exchange CDD inflow 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 graph above, the Bitcoin exchange inflow CDD has shown a sharp rise in its 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 without moving them.
Related Reading: Bitcoin Capitulation Deepens As aSOPR Metric Plunges To December 2018 Lows
Due to the dormancy of their coins, these LTHs accumulate many Coin Days. As such, whenever these holders move their coins, the CDD usually rises due to the scale of Coin Days involved.
The current spike in the Bitcoin exchange inflow CDD thus 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 was done for selling.
From the graph, it is apparent that both previous large spikes in the indicator were followed by declines in the price of Bitcoin.
If the latest surge was also due to LTHs preparing to dump their coins, then the crypto is likely to observe a bearish trend this time as well.
At the time of writing, the price of Bitcoin is floating around $16.4k, down 2% in the last 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