bitcoin binary cdd stays short, this means

On-chain data shows that Bitcoin Binary Coin Days Destroyed (CDD) has been lower recently. Here’s what it says about the current market.

Bitcoin Binary CDD has remained very low recently.

According to data from on-chain analytics firm glassnode, this indicator gained higher value during the 2021 bull run. To understand the CDD metric, the concept of “coin days” needs to be looked at first.

Whenever 1 BTC remains stable on the blockchain for 1 day, it accumulates 1 “Coin Day”. If a coin that has been stable on the network for some time, meaning it has accumulated a certain number of coin days, is now suddenly moved, its coin day counter will naturally revert to zero.

Coins in the days before this was in circulation are said to have been “destroyed”. The CDD indicator measures the total number of coin days being reset across the network on any given day.

When this indicator has a high value, it implies that a large number of coin days are currently being reset in the market. Typically, a trend like this is a sign of movement from “long-term holders” (LTH).

This group includes investors who have been holding their BTC for at least 155 days in advance, so these holders accumulate a large number of coin days. For this reason, the CDD registers a spike whenever they transfer.

In the context of the present discussion, it is not the CDD itself that is of interest, but a modified version of it called the binary CDD. This indicator basically tells us how the CDD currently compares with the historical average value of the metric.

As its name implies, this indicator can only take on two values: 0 and 1. It has a value of 0 if the CDD is below the historical average, while it is 1 if the metric is above it.

Now, here is a chart that shows the trend in the 7-day average bitcoin binary CDD over the years:

The value of the metric seems to have been low in recent days | Source: Glassnode on Twitter

As shown in the graph above, the price of the 7-Day Average Bitcoin Binary CDD has been significantly lower for some time now. This suggests that there has not been a significant destruction of coin days in the market recently.

Naturally, this means that LTH is not taking any unusual steps despite the significant increase in price during the past few months.

LTHs are generally the most determined group in the market, so moves by them could have significant implications for the sector as they are a sign that these holders may also be forced to sell.

The bitcoin bull run during the first half of 2021 saw the 7-day average binary CDD close to 1, meaning LTH was selling in full force. As this has not happened in the rally so far, it appears that the current profits are not enough to move these diamond hands, and they are hoping for better opportunities later.

These investors continuing to hold such bullish confidence could be constructive to the price in the longer term.

btc price

At the time of writing, bitcoin is trading around $27,300, down 1% over the past week.

The asset continues to consolidate | Source: BTCUSD on TradingView

Featured image by Jivani Weerasinghe on Unsplash.com Charts from TradingView.com, Glassnode.com