On March 8, addresses linked to the U.S. government transferred 49,000 bitcoins, worth $1 billion, seized from Silk Road. At the same time, the BTC price fell below $22,000, and the main holder indicator clearly surged.
Does this mean traders should brace for potential future price action?
Bitcoin’s CDD Indicator Sudden Spike
The move to move BTC could cause a massive spike in the number of Coin Destroyed Days (CDD) tracked by Glassnode. The metric measures the weighted movement of bitcoins based on when they were last moved from an address.
CDD is calculated by multiplying the number of bitcoins moved by the number of days since BTC was last added to the address.
CDD indicator spikes typically precede price action, with the bears having a slight advantage. However, some long-term investors can also make more profits in the futures market by transferring Bitcoin.
Days Bitcoin Burned | Source: Glassnode
Bitcoin On-Chain Data Shows No Signs of a Massive Selloff
However, CDD’s recent surge to a 2-month high doesn’t necessarily mean a $1,000-$1,500 price move is in the works.
Exchange inflow data, for example, has not yet shown any significant spikes. Instead, roughly 5,000 BTC (worth around $100 million) were moved out of exchanges in the past 24 hours.
Net BTC volume on exchanges | Source: Glassnode
Thus, the $215 million transferred to Coinbase has had little effect on price so far. However, with only about 20% of the 49,000 BTC transferred to exchanges, the risk of increased selling pressure remains.
BTC daily price chart | Source: TradingView
Currently, BTC is trading above the $21,500 to $21,950 support level, encouraging buyers despite the plethora of negative news this week. A streak of daily closes above this support zone will provide further confirmation.
- Ethereum (ETH) Sends Mixed Signals, But Could Still Outperform Bitcoin
- Bitcoin continues to weaken, where will the market go?
- Filecoin (FIL) Shows Signs of Partial Bottom, Will Recovery Happen?
As reported by Cointelegraph