Bitcoin Binary CDD Approaches Breakout That Historically Kicked Off Bull Rallies

On-chain data shows that the Bitcoin Binary CDD is currently approaching a breakout that marked the start of a bullish rally in the past.

Bitcoin Binary CDD Trending Up Lately

As a CryptoQuant analyst points out mail, the binary CDD is currently inside the “accumulation zone”. To understand what the Binary CDD indicator does, you must first consider the concept of coin days.

A coin day is the amount that 1 BTC accumulates after 1 day of inactivity on the blockchain. This means that, for example, if a stack of 3 coins sits idle for 3 days, it will accumulate 9 coin-days in total.

Now, when coins that have accumulated a number of coin days eventually move through the wallets, their coin days count will naturally reset to zero, and these previously accumulated coin days are considered “destroyed”.

“Coin Days Destroyed” (CDD) is a metric that tracks the reset of such coin days across the entire BTC network. When this indicator has an increased value, it means that a large number of inactive coins are probably moving in the network right now.

A cohort called a group of long-term holders (LTH) hold their coins for long periods of time (thus accumulating a large number of coin-days), so when the CDD is high it means these investors are on the move.

As mentioned before, the relevant version of CDD here is binary CDD, which is a metric that basically tells us if the current CDD value is above the average or not.

Here is a chart that shows the trend of this 182-day moving average (MA) of this bitcoin indicator over the past few years:

Binary Bitcoin CDD

Looks like the 182-day MA value of the metric has seen some slight rise in recent days | Source: CryptoQuant

As you can see in the chart above, the analyst highlighted the trend followed by the 182-day MA of Bitcoin Binary CDD just before the previous two rallies. Both the April 2019 rally and the bull run in the first half appear to have broken out of the “accumulation zone.”

This zone, which occurs below the value of 0.3, is named as such because values ​​of this nature suggest that LTH is not currently showing much selling/moving activity and is thus accumulating cryptocurrency.

This kind of trend is usually seen during a bearish trend, as shown on the chart. However, in bull runs, the metric approaches 1, which means that these LTHs are starting to sell more aggressively.

Interestingly, although this pattern formed during the aforementioned rallies, the second wave of the 2021 bull market did not lead to significant breakouts of the indicator.

Recently, the metric has risen slightly again and is approaching the 0.30 line after staying in the accumulation zone for 529 days. It can be seen from the chart that previous attempts during this bear market ended with the metric being abandoned.

However, if the breakout is successful this time around, then this bitcoin rally could gain a lot of momentum, judging from previous instances of this trend.

Bitcoin Price

At the time of writing, Bitcoin is trading around $26,900, up 36% over the past week.

bitcoin price chart

BTC seems to have shot up in the last couple of days | Source: BTCUSD on TradingView
Featured image by Traxer on, charts by,

Credit :

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker