On-chain data shows a bullish breakout in the Binary CDD indicator for bitcoin, a sign that a strong price rise could be coming for the asset.
bitcoin Binary CDD Is Breaking Out of Accumulation Zone
As noted by an analyst at CryptoQuant Quicktake mailBinary Coin Days Destroyed (CDD) appears to be forming a pattern for the cryptocurrency that has typically been the starting point of an uptrend.
A “coin day” refers to an amount that accumulates 1 btc after remaining idle on the blockchain for “1” day. When a token that had been dormant for several days finally moves on the network, its coin days counter naturally resets to zero.
Therefore, the days of the coin that carried this token are said to be “destroyed.” The CDD tracks the total number of such coin days that are reset through network transactions.
Binary CDD, the real metric of interest here, compares the current CDD to its historical average to tell us if the CDD is higher or lower than the norm at this time. As its name suggests, it can only assume one of two values: 0 or 1.
Now, here is a chart showing the trend of bitcoin binary CDD over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-CDD-Shows-Bullish-Breakout-and-Rally-Returns-to-Full.png" alt="bitcoin Binary CDD” width=”1280″ height=”806″ loading=”lazy” data-recalc-dims=”1″/>
The value of the metric appears to have been getting more dense recently | Source: CryptoQuant
From the chart, you can see that bitcoin's binary CDD did not register a value of 1 too often between the end of the 2021 bull run and the latter parts of 2023. However, since around November last year, the density of instances in which The observed binary CDD 1 has become stronger.
When the binary CDD is 1, it means that the CDD is greater than its current historical average. This implies that ancient coins are seeing more movement than usual at the moment.
“Long-term holders” (LTH) are investors who hold large amounts of coins per day at any given time, as they tend to keep their btc idle for long periods (the limit for a holder to be included in the cohort is 155 days). ).
As such, spikes in CDD tend to indicate that these HODLers are on the move. “In an up cycle, the movement of long-term holders increases as the price increases (orange boxes), and in a down cycle, it decreases (blue boxes),” the quant notes. “This pattern has been repeated since previous cycles.”
Since LTH has started moving now, it is possible that the market is now in the same phase as during the previous bullish periods, highlighted with the orange boxes by the analyst.
A similar pattern is also visible on the 182-day moving average (MA) of the binary CDD, as the chart below shows.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/1707160469_473_Bitcoin-CDD-Shows-Bullish-Breakout-and-Rally-Returns-to-Full.png" alt="bitcoin Pattern” width=”1280″ height=”503″ data-recalc-dims=”1″/>
Looks like the metric is starting to show a breakout | Source: CryptoQuant
As evident from the chart, the 182-day MA of the bitcoin binary CDD is beginning to break out of the accumulation zone, something that has historically caused sustained price increases for the cryptocurrency.
“It is still worth following, but in the end it has gone out of that range,” says the quant. “If it breaks well above this range, there is a high possibility that a full-blown bullish price cycle is beginning.”
btc Price
After its drop towards the $42,200 mark over the weekend, bitcoin appears to have started the week with a return above $43,000.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/02/Bitcoin-CDD-Shows-Bullish-Breakout-and-Rally-Returns-to-Full" alt="bitcoin price chart” width=”1534″ height=”864″/>
The price of the coin has already bounced back today | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, CryptoQuant.com
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