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On-chain data shows selling from Bitcoin long-term holders may have been behind the recent dip in the crypto’s price below $19k.
Bitcoin Exchange Inflow CDD Has Recently Observed A Sharp Increase
As pointed out by an analyst in a CryptoQuant post, there has been some possible selling pressure coming from the long-term holders 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, represent the sum of time each coin in the supply has been dormant for.
When these coins that had previously been sitting still show some movement, the coin days gained by them are said to be “destroyed” as they reset back to zero. The total number of these is precisely what the CDD metric measures.
Now, since 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 can 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 above graph, the Bitcoin exchange inflow CDD saw a spike in its 14-day MA value just recently. This suggests that long-term holders have been making some big deposits to exchanges during the last week.
In the past, such spikes in the exchange inflow CDD have usually been bearish for the price of the crypto as these investors usually deposit to exchanges for dumping purposes.
This time as well, shortly after the indicator’s values became raised, BTC observed a plunge from a local high of around $22.5k.
Following this plummet, however, the exchange inflow CDD still hasn’t gone down much and has 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, Bitcoin’s price floats around $19.1k, down 12% in the last week. Over the past month, the crypto has lost 8% in value.
The below chart shows the trend in the price of the coin 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