2024-5-7 19:00 |
On-chain data shows the Bitcoin long-term holders have finally cooled off their profit-taking after showing a wild selloff just earlier.
Bitcoin Coin Days Destroyed Has Calmed Down For BTC RecentlyAs pointed out by BTC on-chain research account “The Bitcoin Researcher” in a post on X, the Coin Days Destroyed In Profit metric has declined recently. A “coin day” is a quantity that 1 BTC accumulates after staying dormant on the blockchain for 1 day. Thus, when a coin sits still in the same address for a while, it carries some number of coin days.
When a coin like this is finally moved on the network, its coin days count resets back to zero, and the coin days that it had been holding are said to be “destroyed.” The Coin Days Destroyed (CDD) keeps track of the total amount of coin days being destroyed in this manner across the blockchain on any given day. When the value of this indicator spikes, it means that a large number of aged coins are on the move.
These spikes are attributed to the “long-term holders,” investors who normally tend to HODL onto their coins for extended periods. This group holds large coin days, so their moves end up leading to a destruction of a large amount of them.
Large moves from these investors, though, are not that common, as they are by nature HODLers who remain tight despite whatever may be going on in the wider market. When the LTHs do break their dormancy, it’s generally for selling, so spikes in the CDD may correspond to selling pressure arising from this group.
In the context of the current topic, profit-taking from these investors specifically is of interest, so the analyst has cited the CDD data for only the coins that were carrying a profit prior to the move.
Here is the chart for this Bitcoin indicator over the last few years:
As displayed in the above graph, the Bitcoin CDD In Profit had risen to some very high levels earlier as the BTC rally towards the new all-time high had taken place.
This extraordinary spike would suggest that the run had enticed even these diamond hands into harvesting their profits. As the asset’s drawdown post this rally has played out, though, the metric’s value has declined, suggesting a decrease in selling pressure from the LTHs.
The ‘CDD In Profit’ has now come down to relatively low levels, although its value is still higher than during the bear market. Given this trend, it’s possible that the LTH profit-taking may have been exhausted for now, or at least is close to being so.
It now remains to be seen how the Bitcoin price develops from here, as perhaps one of the main obstacles to the rally is now out of the asset’s way.
BTC PriceBitcoin’s recovery surge has slowed down over the last few days as the asset’s price has continued to consolidate around the $64,000 level.
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