On-chain data shows that long-term bitcoin holders have potentially been selling recently, something that may explain btc’s continued bearish momentum.
bitcoin inflow to CDD exchange has seen huge spikes recently
As an analyst in a CryptoQuant Quicktake mail As explained, old cryptocurrency tokens have recently been deposited in large quantities on centralized exchanges.
The on-chain metric we are interested in here is “Coin Days Destroyed in Exchange Inflow (CDD)”. A “coin day” refers to the amount that 1 btc accumulates after sitting idle on the blockchain for 1 day.
When a coin that had been sitting still inside a wallet is finally moved, its coin days counter naturally resets to zero, and the coin days it had been carrying prior to the move are said to be “destroyed.”
The CDD keeps track of the total number of days of coins that are reset in this way across the network. However, in the context of the current topic, it is not the general CDD that is in focus, but rather the exchange input CDD, which only keeps track of days of coins that are destroyed through transactions in wallets connected to exchanges.
Now, here is a chart showing the trend in bitcoin Exchange CDD inflow over the past month or so:
<img src="https://technicalterrence.com/wp-content/uploads/2024/07/Bitcoin-recovery-stalls-as-HODLers-apply-selling-pressure.png" alt="bitcoin inflow to CDD exchange” />
As can be seen in the chart above, bitcoin inflows to CDD exchanges have seen some significant spikes this month. This would imply that many dormant coins have recently seen deposits to exchanges.
Generally, spikes in CDD correlate with the movement of long-term holders (LTH), as these HODLers tend to accumulate large amounts of coins per day. Therefore, recent spikes in CDD inflow suggest that these diamond hands have been transferred to exchanges.
Holders transact on exchanges when they want to use one of the services offered by these platforms, which can include selling. The chart shows that the spikes at the beginning of the month occurred when bitcoin had plummeted towards its lows, implying that selling pressure from this group may have played a role in the drop.
The latest spike, larger in scale than the others, occurred as btc attempted to start a recovery rally from these recent lows. So far, btc has had no luck, suggesting that LTH selling has potentially been holding the coin back.
It remains to be seen how the Exchange Inflow CDD performs in the coming days and whether potential additional spikes could prevent bitcoin from recovering.
btc Price
At the time of writing, bitcoin is trading at around $57,900, up more than 4% from last week.
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