In this article, we’ll look at Bitcoin on-chain indicators, namely the CDD indicator (“Coin Days Destroyed”). This indicator can be used to determine the transaction age of the coins and determine whether long-term owners got out during the last price increase.
Several versions of the CDD indicator show below average values - this indicates that “old” Bitcoin will not be transferred. Holders with a long-term perspective do not seem to be leaving the market during the current upswing.
The days before a new coin transaction can be quantified with the CDD indicator (“Coin Days Destroyed”). A “Coin Day” is added for every day on which a coin is not issued or moved. As soon as a transaction takes place, the coin days are “destroyed”.
The CDD value shows us how many coins were “destroyed” on a certain day. If the value is high, it means that coins that have not been moved for a long time have moved within a short period of time. High values are usually seen when the price has increased significantly. Also, when the Bitcoin price recovers after a drop, the value is typically high.
Since the Bitcoin price reached the top of 2017 (black arrow), the CDD value has risen sharply several times. Old coins left the market at these times during the rallies. In hindsight, old coins took advantage of this high to exit the market before the correction continued. In 2018, the CDD skyrocketed five times (black circles) and reached values between 16.5 million and 32.2 million.
However, after the peak in 2021, this was no longer the case. Even if the CDD rose to a peak of 19.3 million when the Bitcoin price reached its last all-time high, it is only twice over 15 million during the course correction, namely on April 30, 2021 and on May 24. 2021, increased. Unlike during the correction in 2017, the owners of the old coins did not get out during the bounce, although the BTC price has fallen significantly since the all-time high of $ 64,437.
The Binary Coin Days Destroyed value is obtained by taking the average CDD value and relating it to the daily CDD value. If the daily CDD value is greater than the average value, then the binary CDD value gives us 1 as a result. Otherwise, the value is 0. Since July 30, 2021, there has not been a single day on which an above-average number of coins were destroyed. So it seems that fewer and fewer coins are being sent.
The 90-day CDD indicator delivers a similar result. This currently delivers a relatively low value of 197,975. This value is below the lower threshold of 200,000. In addition, this value differs significantly from the values that occurred after the Bitcoin price corrections began in 2013 and 2017. Both times the 90-day CDD rose significantly, suggesting an exit rally for the old coins before continuing to decline. In 2013 it reached values of around 580,000, while in 2017 it even rose to 600,000 (black arrows). The values of the versions of the CDD indicator shown here are all not in a range in which one could previously see a further, longer correction phase.
Translated by Maximilian M.
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