Low Bitcoin Binary CDD: What it Indicates for Cryptocurrency Investors

Recent on-chain data reveals that the Bitcoin Binary Coin Days Destroyed (CDD) has remained at very low levels. This metric reached high values during the 2021 bull run, and understanding the CDD requires looking at the concept of “coin days.” Whenever 1 BTC stays stationary on the blockchain for 1 day, it accumulates 1 “coin day.” If a coin that has remained unmoved on the network for a while is suddenly transferred, its coin days counter resets to zero, and the coin days it had previously been carrying are said to be “destroyed.” The CDD indicator measures the total number of coin days being reset throughout the network on any given day. When this indicator has a high value, it implies that a large number of coin days are being reset in the market currently, which is generally a sign of movement from the “long-term holders” (LTHs). This group includes investors that have been holding their BTC for at least 155 days, so these holders tend to accumulate large numbers of coin days. Whenever they make transfers, the CDD registers a spike. In the context of the current discussion, the Binary CDD is of interest, which is a modified version of the CDD that tells us how the CDD currently compares with the historical average value of the metric. This indicator can only attain two values: 0 and 1. It has a value of 0 if the CDD is below the historical average, while it’s 1 when the metric is above it. The 7-day average Bitcoin Binary CDD has had a pretty low value for a while now, which suggests that there hasn’t been any significant destruction of coin days in the market recently. This means that the LTHs haven’t been making any moves out of the ordinary, despite the price observing a notable increase during the last few months. The LTHs are generally the most resolute bunch in the market, so transfers from them can have significant implications for the sector since they are a sign that even these holders may have been forced to sell. The Bitcoin bull run during the first half of 2021 saw the 7-day average Binary CDD stay near 1, implying that the LTHs had been selling in full force. As this hasn’t been the case in the rally so far, it appears that the current profits aren’t enough to move these diamond hands, and they are likely expecting better opportunities later on. These investors continuing to hold such a bullish conviction can be constructive for the price in the long term. At the time of writing, Bitcoin is trading around $27,300, down 1% in the last week.

J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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