Dormant Supply Movement (CDD)

Overview

This pillar analyzes Coin Days Destroyed (CDD), a key on-chain metric that measures the activity of older, long-held coins. It provides a powerful signal about the sentiment and behavior of experienced crypto investors, often preceding major market moves.

What It Does

The pillar quantifies the economic weight of transactions by giving more significance to coins that have been dormant for longer. When a long-term holder sells, a large number of 'coin days' are destroyed, creating a spike in the metric. This analysis tracks these spikes and underlying trends to gauge supply-side pressure from seasoned market participants.

Why It Matters

CDD offers a glimpse into the actions of 'smart money' who typically accumulate in bear markets and distribute during bull markets. A rising CDD can signal an increase in profit-taking and a potential market top, while low CDD suggests strong holding behavior and accumulation.

How It Works

First, the age of every unspent transaction output (UTXO) on the blockchain is tracked. When a UTXO is spent, its value is multiplied by its age in days to calculate the Coin Days Destroyed. These values are then aggregated daily to create a time-series chart, which is analyzed for significant spikes, trends, and divergences from price.

Methodology

The core calculation is CDD = Σ(Value of UTXO * Age of UTXO in days) for all transactions in a 24-hour period. Analysis often involves applying a 7-day or 30-day moving average to smooth the data and identify underlying trends. Spikes exceeding 2 standard deviations above the 90-day mean are considered significant selling pressure events.

Edge & Advantage

This provides a leading indicator of supply changes, allowing you to anticipate market-moving sell-offs from long-term holders before they are fully reflected in the price.

Key Indicators

• Liveliness

  high

  The ratio of Coin Days Destroyed to the sum of all Coin Days ever created. A rising Liveliness indicates long-term holders are liquidating.

• 90-Day CDD Moving Average

  high

  A smoothed trendline of CDD. When the daily CDD crosses above this line, it signals a potential increase in distribution.

• Binary CDD

  medium

  A simple yes or no indicator showing if the daily CDD was higher or lower than the yearly average. Useful for backtesting strategies.

Data Sources

• Glassnode

  Leading on-chain analytics platform providing detailed charts and metrics for CDD and its derivatives.

• CryptoQuant

  On-chain data provider that tracks CDD across various cryptocurrencies and offers alerting tools.

• LookIntoBitcoin

  Provides free charts and educational content on various on-chain metrics, including CDD.

Example Questions This Pillar Answers

• → Will Bitcoin's price fall below $60,000 by the end of the month?
• → Will the 30-day moving average of Coin Days Destroyed for Ethereum reach a new 6-month high?
• → Will Bitcoin's volatility be higher in Q3 than in Q2?

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