Bitcoin Long-Term Holders Start Capitulating Amid Panic
May 10 2022 - 2:00PM
NEWSBTC
On-chain data suggests Bitcoin long-term holders have started to
capitulate recently as the sharp price drop causes panic in the
market. Bitcoin CDD Inflow Indicator Jumps Up, Showing Long-Term
Holders Have Been Selling As pointed out by a CryptoQuant post, the
recent price drop has pushed long-term holders towards selling
their BTC. “Coin days” are the number of days a Bitcoin has
remained dormant for. An example: if 1 BTC doesn’t move for 5 days,
it accumulates 5 coin days. When such a coin would be transferred
or moved, its coin days would be “destroyed” as the number will
reset back to zero. Related Reading | Bitcoin Slips Below $33k
As Exchange Inflows Reach Highest Value Since July 2021 The “coin
days destroyed” (CDD) metric naturally measures how many of these
coin days are being destroyed in the entire market at any given
time. A modification of this indicator, called the “Bitcoin
exchange inflow CDD,” tells us about only those coin days that were
destroyed by a transfer to exchanges. A high value of the inflow
CDD generally suggests that long-term holders (who accumulate a
large number of coin days) are moving their coins to exchanges.
Investors usually transfer their Bitcoin to exchanges for selling
purposes, so LTHs transferring a large number of their coins can be
bearish for the price of the crypto. Now, here is a chart that
shows the trend in the BTC inflow CDD over the past month: The
value of the indicator seems to have spiked up recently | Source:
CryptoQuant As you can see in the above graph, the Bitcoin exchange
inflow CDD has observed some high values over the last few days.
This shows that long-term holders have been selling amid the recent
panic in the market due to the price drop from $38k to below $30k.
Related Reading | Terra Beats Tesla As Second-Largest
Corporate Bitcoin Holder After $1.5B Purchase The especially large
spikes in the last two days suggest LTHs may have started to go
through a phase of capitulation. Since LTHs usually make up the
Bitcoin cohort that is the least likely to sell, capitulation from
them is a negative sign for the price of the coin. BTC Price At the
time of writing, Bitcoin’s price floats around $31.6k, down 18% in
the last seven days. Over the past month, the crypto has lost 26%
in value. The below chart shows the trend in the price of the coin
over the last five days. Looks like the price of BTC has observed a
plunge in the past few days | Source: BTCUSD on TradingView
Bitcoin’s drop has continued today as the crypto briefly touched
below $30k for the first time since July of last year, before
rebounding back to the current level. Featured image from
Unsplash.com, charts from TradingView.com, CryptoQuant.com
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