Key Points
- Bitcoin’s Coin Days Destroyed (CDD) has reached a five-year high, suggesting long-term holders are distributing their coins.
- Bitcoin’s Network Value to Transactions (NVT) ratio indicates it may be overvalued, with investor sentiment turning bearish.
Bitcoin’s Coin Days Destroyed (CDD), an on-chain metric, has hit a five-year peak, as per data from CryptoQuant.
The CDD computes the number of days Bitcoin has remained inactive, multiplied by the volume transacted.
Long-term Holders Distributing Coins
When the CDD reaches a peak on the 60-day Moving Average (MA), it typically signifies that long-term holders are distributing their coins.
Historically, this has led to a substantial correction in Bitcoin‘s price.
At the time of writing, Bitcoin was trading at $69,663, showing a sideways movement in the last 24 hours.
Decrease in On-chain Activity
Further analysis of Bitcoin’s on-chain status revealed a decrease in network activity.
The 24-hour active addresses were down to 706,000 from over 1 million a few days ago.
This decline suggests a drop in successful Bitcoin transactions.
If the network activity continues to be low, it could impact the price as demand might be low, potentially causing Bitcoin’s price to fall below $69,000.
In addition to active addresses, the Network Value to Transactions (NVT) ratio was also examined.
This metric helps determine if an asset is overvalued or undervalued based on its capacity to transact coins.
A high NVT ratio, like Bitcoin’s current 405, indicates bearish investor sentiment and suggests that Bitcoin may be overvalued in the current market conditions.
Crypto analyst Ali Martinez shared his short-term view on Bitcoin, suggesting that its price could drop to $63,150 if the $68,300 support fails.
However, if Bitcoin retests the $70,320 level, its price could increase.
Historically, Bitcoin has experienced high volatility as the halving event approaches, and it appears that this time will be no different.
Despite current conditions suggesting a potential downturn, Bitcoin may still surpass the $70,000 mark after the four-year event.
