On-chain data shows that some old Bitcoin supplies have recently moved to exchanges, which could be bearish for the price of the crypto.
Bitcoin Exchange Inflow CDD has risen over the past day
As one analyst pointed out in a post on CryptoQuant, long-term holders have been depositing coins on the exchange over the past day.
There are two relevant indicators here; the first is “exchange flow,” which measures the total amount of Bitcoin sent to the wallets of all centralized exchanges.
For the second, there is a concept called “coin days”, which is used as a measure of dormant supply on the network. Every time a BTC sits still on the chain for 1 day, it accumulates 1 day worth of coins. The total number of days of parts therefore tells us how many days the supply has not been moved.
However, when a coin that has accumulated coin days shows movement, those coin days are reset or “destroyed”. “Coin Days Destroyed” (CDD) is a metric that tracks the number of days of coins reset on the network.
Now, here is a chart that shows the Bitcoin CDD trend specifically for exchange trades:
Looks like the 7-day EMA value of the metric has been elevated recently | Source: CryptoQuant
As you can see in the chart above, the inflow of Bitcoin CDD exchanges has seen a peak over the past day.
Since the indicated indicator is only for spot exchanges, these trades were most likely made for selling purposes, as this is what investors typically use these exchanges for.
The long-term holder group is a type of cohort in the BTC market that includes all investors who hold their coins for a long time without selling or moving them, thus accumulating a large amount of coin days in the process.
As such, CDD spikes generally suggest that the old supply (i.e. the supply held by long-term holders) is on the move. Selling LTH has always been bearish for Bitcoin price.
The latest spike of a similar magnitude was seen just a few days ago, around which the coin’s price observed a short-term drop.
The graph also shows the trend of the age brackets of inflows spent and outflows, which is an indicator that highlights the individual contributions to inflows from different groups of holders in the market.
It looks like a variety of cohorts have shown movement recently, with long-term holders with 6-month to 12-month coins moving a particularly large amount.
As of this writing, the price of Bitcoin is hovering around $18.6,000, down 5% in the past week.
BTC continues to be rangebound | Source: BTCUSD on TradingView
Featured image from Hans-Jurgen Mager on Unsplash.com, charts from TradingView.com, CryptoQuant.com