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Coin Days Destroyed (CDD) takes the number of coins that have moved on-chain at a particular time and multiples that value by the number of days since those coins were last moved:
Number of coins * days since coins last moved = coin days destroyed (CDD)
Some simple examples showing how Coin Days Destroyed is calculated:
This metric, therefore, gives an extra weighting to coins that have not moved for a long period of time.
Why would we do this? Because Bitcoin investors who have been in the market for long periods of time and have accumulated bitcoin are likely to have a greater understanding of Bitcoin’s price cycles versus newer entrants into the market.
We can therefore consider them to be ‘smart(er) money’. For this reason, there is value in tracking large movements in coin days destroyed over time.
Coin Days Destroyed is sometimes also referred to as Bitcoin Days Destroyed.
The raw data taken from the blockchain for this metric can be erratic and noisy. Typically moving averages are therefore used to smooth out the data to make trends more visible to see.
This allows the strategic investor to interpret the data more easily. When doing so it is noteworthy that coin days destroyed typically jump up at critical times in Bitcoin’s price action.
The reason for this is that investors with large amounts of bitcoin that have been held in wallets for long periods of time, tend to move their bitcoin between wallets (most likely to sell) at those key times.
This metric was first mentioned by a bitcointalk.org user, ByteCoin in 2011.
This adaptation of NVT Signal adds standard deviation bands to identify when Bitcoin is overbought or oversold.
Pulls apart differences between Market Value and Realised Value to identify market cycle highs and lows.
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