Is Bitcoin Price Near The Top

Despite bitcoin’s meteoric rise of over 550% this year, on-chain analysis paints a picture of it still being early in the game. Why? Three words: Coin Days Destroyed (CDD).

Nowhere Near The Top This Year

By assessing CDD, we can visualize the confidence among long-term bitcoin holders relative to the current price of bitcoin.

To understand how CDD works, let’s start with coin days.

What Is A Coin Day?

Coin days are the number of days since a bitcoin was moved over from one wallet to another. The logic behind them is to assign a higher value to an idle coin. Why? Because long-term bitcoin holders have greater knowledge of market cycle volatility and thus are more adept at identifying the best times to buy or sell.

So when long-term holders sell their bitcoin, the Coin Days Destroyed will surge higher. When strong hands hold, CDD trends lower which suggests their confidence in a new bull market.

What Are Coin Days Destroyed?

Coin Days Destroyed is a term for when bitcoin that’s been sitting in a wallet—accruing coin days—is all of a sudden sold, causing those coin days to be “destroyed.” Importantly, bitcoin is not actually destroyed. CDD is simply terminology that calculates the time erased.

Here’s an example: Imagine an investor purchases 1 bitcoin and holds it in their wallet for 90 days, then sees a big increase in the price and decides to sell. He would have “destroyed” 90 bitcoin days.

Source link Bitcoin Magazine

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