On-chain data shows that long-term Bitcoin holders have finally cooled their profit-taking after showing a wild sell-off just earlier.
The days of destroyed Bitcoin coins have recently calmed down for BTC
As highlighted by BTC on-chain research account “The Bitcoin Researcher” in a job on X, the Coin Days Destroyed In Profit metric has recently declined. A “coin day” is an amount that 1 BTC accumulates after remaining dormant on the blockchain for 1 day. So when a coin remains stationary at the same address for a certain amount of time, it carries a certain number of coin days.
When a coin like this is finally moved onto the network, its coin days count is reset to zero and the coin days it held are said to be “destroyed”. THE Days of Parts Destroyed (CDD) keeps track of the total number of days worth of coins destroyed in this way on the blockchain on a given day. When the value of this indicator increases, it means that a large number of old coins are on the move.
These peaks are attributed to “long-term holders“, investors who normally tend to HODL on their coins for long periods of time. This group holds large days worth of coins, so their movements eventually lead to the destruction of a large amount of them.
However, large moves by these investors are not that common, as they are inherently HODLers who stay tight despite whatever may be happening in the broader market. When LTHs emerge from dormancy, it is usually for selling, so CDD spikes may correspond to selling pressure emanating from this group.
In the context of the current topic, the profit-taking of these investors is particularly interesting, which is why the analyst cited CDD data only for coins that were making a profit before the move.
Here is the chart of this Bitcoin indicator over the past few years:
The value of the metric appears to have registered a drawdown in recent weeks | Source: @ResearchBTCNow on X
As seen in the chart above, Bitcoin CDD In Profit had reached very high levels earlier as BTC’s rally to the new all-time high took place.
This extraordinary rise suggests that the rush has encouraged even these diamond dealers to reap their profits. However, as the asset fell after this rally, the value of the metric declined, suggesting a reduction in LTH selling pressure.
The “CDD In Profit” has now returned to relatively low levels, although its value remains higher than during the previous period. bear market. Given this trend, it’s possible that LTH’s profit taking is exhausted for now, or at least is about to be.
It now remains to be seen how the Bitcoin price moves from here, as one of the main obstacles to the rally may now be gone.
BTC Price
Bitcoin’s recovery wave has slowed over the past few days as the asset’s price continued to consolidate around the $64,000 level.
Looks like the price of the asset has overall registered a jump in the past five days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, searchbitcoin.net, chart from TradingView.com
