This Bitcoin Metric Foreshadowed Recent Price Drops, Quant Reveals
April 29 2024 - 1:30PM
NEWSBTC
A quant has pointed out how a Bitcoin metric may have detected
selling pressure in the market, and therefore, the subsequent price
drops, in advance. Bitcoin CDD Registered Spikes Before Recent
Price Plunges In a new post on X, an analyst has discussed about
how the Coin Days Destroyed (CDD) on-chain indicator may be used to
identify selling pressure in the market early. A “coin day” refers
to the quantity that 1 BTC accumulates after staying still on the
blockchain for 1 day. When a token stays dormant for a while, it
naturally accumulates some number of coin days, and once it’s
finally transferred on the network, its coin days counter resets
back to zero. Related Reading: XRP Whales Are Active: Here’s Where
They Are Sending Coins The coin days that this token had been
carrying prior to this movement are said to be “destroyed” by the
transaction. The CDD keeps track of the total number of such days
being reset across the network on any given day. Now, here is a
chart that shows the trend in the CDD for Bitcoin over the last
couple of months: The pattern that the indicator has followed
alongside the BTC price in the past two months | Source:
CryptoQuant As displayed in the above graph, the Bitcoin CDD
observed a large spike just a few days ago. Whenever this metric’s
value shoots up, it means that a large amount of coins previously
dormant are now on the move. Such transfers are generally
correlated with the long-term holder whales, who are large entities
who carry their coins for significant periods, and thus, accumulate
a large number of coin days. Often, when these dormant entities
finally break their silence, it’s for selling-related purposes. As
such, spikes in the CDD can be an indication that the HODLer whales
have decided to do some selling. In the chart, the quant has
highlighted the major spikes that the indicator observed during the
last two months. It would appear that following the onset of such
spikes, the asset’s price has generally gone on to witness some
bearish action. The aforementioned spike from a few days ago, too,
has proven to be bearish for the asset so far as it occurred when
Bitcoin had recovered towards $67,000, and the price has since
erased this recovery. It would appear that some of these diamond
hands had looked at this surge as an exit opportunity. Related
Reading: 85% Of Altcoins In “Opportunity Zone,” Santiment Reveals
Last month, the CDD had seen two spikes even larger than this
recent one. These spikes had occurred near what continues to be the
top for the rally so far. Thus, the selling pressure from HODLers
may have played a role in this top and the subsequent drawdown that
followed. Given the relationship that this metric has appeared to
have held with the Bitcoin price, it may be worth keeping an eye on
it, as it may continue to indicate the onset of selling pressure in
the near future as well. BTC Price Bitcoin has continued its
bearish trajectory during the past day as it has now slipped
towards the $62,300 level. Looks like the price of the coin has
been going down over the last few days | Source: BTCUSD on
TradingView Featured image from Kanchanara on Unsplash.com,
CryptoQuant.com, chart from TradingView.com
Quant (COIN:QNTUSD)
Historical Stock Chart
From May 2024 to Jun 2024
Quant (COIN:QNTUSD)
Historical Stock Chart
From Jun 2023 to Jun 2024