Bitrabo Editorial
Recent on-chain data reveals that Bitcoin long-term holders have been holding onto their coins and not engaging in much activity.
Bitcoin Binary CDD Indicates Low Values
According to Glassnode, an on-chain analytics firm, mature Bitcoin coins have not been moving much despite recent price volatility. The key indicator here is “Coin Days Destroyed” (CDD), which measures the amount of time Bitcoin has remained dormant on the blockchain.
A coin day is accumulated when 1 BTC remains inactive on the blockchain for a day. When a previously dormant coin is finally transferred, its accumulated coin days are reset to zero.
The CDD metric tracks the total number of coin days being reset or destroyed on the blockchain each day. However, the focus is on a modified version called the “binary CDD,” which compares the current CDD value with the long-term trend.
The binary CDD can only have two values: 0 and 1. A value of 0 means the CDD is currently below the long-term average, while a value of 1 indicates it is higher.
A chart displaying the trend in the 7-day SMA Bitcoin binary CDD over the past few years is shown:
The recent value of the metric has been quite low | Source: Glassnode on Twitter
As seen in the chart, the 7-day SMA Bitcoin binary CDD has remained low for a while, indicating that there have not been many old coins moving recently.
Typically, when the CDD has high values, it suggests that long-term holders (LTHs) are active. LTHs are investors who have held their coins for at least 155 days.
Since these investors tend to remain inactive for long periods, they accumulate significant amounts of coin days. Therefore, when they start showing activity, the CDD spikes as their accumulated coin days are reset.
The chart shows that the 7-day SMA Bitcoin binary CDD was elevated during the bull market in the first half of 2021, indicating that LTHs were taking profits at that time.
However, in recent months, neither the market rally nor the recent volatility caused by events like the SEC charges against Binance and Coinbase has compelled Bitcoin LTHs to make significant moves.
BTC Price
At the time of writing, Bitcoin is trading around $26,500, up 2% in the last week.
BTC has experienced some recent recovery | Source: BTCUSD on TradingView
Featured image from Aleksi Räisä on Unsplash.com, charts from TradingView.com, Glassnode.com