Bitcoin Coin Days Destroyed. One scary chart. Is Bitcoin bull market over?
This is the chart showing Bitcoin’s price and the CDD (Coin Days Destroyed) indicator. We can note that all price peaks were accompanied by high CDD (Coin Days Destroyed) values. We are seeing high CDD values right now.
What is CDD and why it matters?
Coin Days Destroyed is a way to measure how much old Bitcoin is being spent or moved. Each Bitcoin earns “coin days” for every day it stays in the same wallet without being spent. For example, if you have 1 Bitcoin that hasn’t been moved for 10 days, it has 10 coin days (1 Bitcoin × 10 days). When you spend or move your Bitcoin, you “destroy” the coin days that Bitcoin has accumulated. If you move that 1 Bitcoin after 10 days, you destroy 10 coin days. When many old Bitcoins are moved or sold, the CDD value goes up. This could mean that long-term holders (smart money) are starting to sell their Bitcoin, which could signal that the market might be reaching a peak. Thus, a high CDD value is a very negative signal for the market.
These data contradicted our model that I described here
Therefore, I found it useful to dig deeper.
As we know, Bitcoin ETF funds were approved in January 2024. Since then, there has been active rotation among investment funds. The main and essentially only Grayscale fund lost almost two-thirds of its holdings.
The main coins have moved to a new BlackRock ETF (IBIT). But the total investor participation in the funds has increased (although it was not so much).
Thus, although a large amount of old coins were moved (increasing Coin Days Destroyed value), the final beneficiaries likely remained the same.
But that’s not all.
It turned out that the largest spike in Coin Days Destroyed occurred on May 28. I have my own Bitcoin transaction database, which I mentioned in this post
I simply loaded the transactions for that day and checked the high CDD values. It turned out that these were few very large transactions involving tens of thousands of coins with a single recipient address (JbezDVd9VsK9o1Ga9UqLydeuEvhKLAPs6). According to platform ArkhamIntelligence, this address belongs to Mt. Gox
Experienced crypto investors know what it is. For the rest, here’s a brief overview:
Mt. Gox was once the largest Bitcoin exchange in the world. Founded in 2010 by Jed McCaleb and later acquired by Mark Karpeles, it was headquartered in Tokyo, Japan. At its height, Mt. Gox handled around 70% of all Bitcoin transactions globally and was a major player in the cryptocurrency market. In early 2014, Mt. Gox faced severe security issues, culminating in the reported loss of approximately 850,000 Bitcoins (worth hundreds of millions of dollars at that time) due to hacking and mismanagement. The exchange suspended trading and filed for bankruptcy in February 2014.
This year, the exchange Mt. Gox began repaying its debts. On May 28, there was a technical movement of Bitcoins within addresses belonging to Mt. Gox. The owner of the coins remained the same; however, by moving coins from one address to another (even though both belong to the same entity), we effectively ‘Coin Days Destroyed’. Since the exchange had not been active for a long time, the blockchain saw the movement of truly very old coins.
But for us, the most important thing is that this was not a sign of long-term investors exiting Bitcoin.
Our long-term model still gives a strong bullish signal.
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