Bitcoin 100-Day SMA Supply Adjusted Dormancy Has Rapidly Gone Up
As pointed out by an analyst in a CryptoQuant , the selloff could potentially be even stronger than the one seen in November 2018. A relevant concept here is of a “coin day,” which is the amount of 1 BTC accumulated after sitting still on the chain for 1 day. Thus, when a token stays dormant for a certain number of days, it gains coin days of the same amount.However, when this coin is finally moved, its coin days naturally reset back to zero, and the coin days it had previously accumulated are said to be destroyed. An indicator called the “Coin Days Destroyed” (CDD) measures the total amount of such coin days being destroyed through transfers on the entire Bitcoin network.
The 100-day SMA value of the metric seems to have been quite high in recent days | Source:Note that the version of the metric in the graph is actually the supply-adjusted dormancy, which is simply calculated by dividing the original indicator by the total amount of Bitcoin supply that’s currently in circulation. The reason behind this change lies in the fact that the supply of the crypto isn’t constant, but rather moving up with time. So, accounting for this adjustment makes it so that comparisons with previous cycles are easier to do.
As you can see in the above chart, the Bitcoin supply-adjusted dormancy has been on a steady uptrend since the lows observed following the FTX crash. This means that the old supply has been observing rising activity recently, suggesting that the long-term holders might be exerting selling pressure on the market.
The quant notes that a similar trend in the indicator was also seen back in August 2018, where the metric started on an uptrend from the lows seen early in that month. Three months after this uptrend started, BTC observed its final leg down of the bear market, during the crash of November 2018.
If this previous trend is anything to go by, then Bitcoin could be at risk for another selloff soon. And since the uptrend in the metric this time around is even sharper, a potential plunge might be deeper as well.BTC Price
At the time of writing, Bitcoin is trading around $20,900, up 11% in the last week.Looks like BTC has declined in the last few days | Source: