On-chain data shows that the days of bitcoin destructive (CDD) have been declining lately. Here’s what that says about the current market.
Bitcoin’s binary CDD has been at very low levels recently
According to data from the on-chain analytics company glassThis indicator achieved high values during the upward run of 2021. To understand the CDD measure, the concept of “currency days” must be considered first.
When 1 BTC remains stable on the blockchain for 1 day, it accumulates “1 coin day”. If a coin that has been unaffected on the network for a while has been moved, meaning it has accumulated a certain number of coin days, and is now suddenly moved, its coin days counter will naturally reset to zero.
It is said that the days of coins carrying it were once “ruined”. The CDD indicator measures the total number of days of currencies resetting across the network on any given day.
When this indicator has a high value, it means that a large number of currency days are currently resetting in the market. In general, this type of trend is a sign of movement from “long term holders” (LTHs).
This group includes investors who have been holding BTC for at least 155 days, so these holders tend to accumulate large numbers of coin days. That’s why, whenever they make conversions, Giants FDs score higher.
In the context of the current discussion, CDD per se is not of interest, but a modified version of it called the due diligence dichotomy. This indicator basically tells us how CDD currently compares to the average historical value of the scale.
As already evident from its name, this indicator can only reach two values: 0 and 1. It has a value of 0 if the CDD is below the historical average, while it is 1 when the scale is above it.
Now, here is a chart showing the trend in Bitcoin Binary’s 7-day average CDD over the past few years:
The value of the metric seems to have been low in recent days | Source: Glassnode on Twitter
As shown in the chart above, the 7-day average CDD on Bitcoin Binary has had a very low value for a while now. This indicates that there has not been any major currency breakout days in the market lately.
Naturally, this means that LTHs haven’t made any out of the ordinary moves, even though the price has seen a significant uptick over the past few months.
LTHs are generally the most packaged group on the market, so conversions from them could have significant implications for the sector as it is a sign that even those owners may have had to sell.
Bitcoin’s bullish rally during the first half of 2021 saw the binary 7-day CDD average stay near 1, which means that LTHs have been selling off at full steam. Since this has not been the case on the rise so far, it appears that current earnings are not enough to get these diamond hands moving, and they are likely to expect better opportunities later on.
That these investors continue to hold such bullish conviction could be beneficial to the price in the long run.
BTC price
At the time of writing, Bitcoin was trading at around $27,300, down 1% in the past week.
The asset continues to consolidate | Source: BTCUSD on TradingView
Featured image by Jievani Weerasinghe on Unsplash.com, charts from TradingView.com, Glassnode.com