Bitcoin whales “hodl” and expect share prices to rise
The cryptocurrency market is currently going through a critical phase. The majority of experts agree that the USD 6,800 mark is a very important support level for Bitcoin so that the BTC price does not continue to fall. If it runs after the “Bitcoin Whales” and long-term investors, there will soon be an upswing.
As the “Bitcoin days destroyed” (BDD) index shows, Bitcoin whales and long-term investors currently tend more than ever to simply leave their bitcoin lying on a cold storage and “hodl”, probably in the expectation that the bitcoin price will rise.
BambouClub pointed out via Twitter the day before yesterday that in line with the current figures of the BDD trend shows that owners of large quantities of bitcoin currently tend to keep their bitcoin and not sell it.
The Bitcoin Days Destroyed index was created after it turned out that the transaction volume per day is an inappropriate measure of activity in the Bitcoin network. After all, someone could keep sending the same BTC back and forth between his own addresses and thus artificially increase the transaction volume.
With Bitcoin Days Destroyed, more weight is added to the Bitcoin that has not been output for a long time. To achieve this, a calculation is performed for each bitcoin transaction, based on the number of BTCs it contains, multiplied by the number of days on which these BTCs were not moved. For example, the BDD for a transaction is 70 if someone has 10 BTCs and sends them again after just one week.
The increase in BDD indicates that the activity level in the bitcoin network is rising. Peaks can represent a large amount of “old” bitcoin that is transferred. This may indicate that early investors are moving their BTCs between different wallets or even cashing them out. An increase in BDD can also typically be caused by exchanges that move BTC between their wallets. This does not necessarily correspond to an increasing transaction volume.
Peaks can correlate with highs or lows of the bitcoin price. The increase in the BDD in July 2017 is likely to be due to the Bitcoin Cash-Hard-Fork in August. On 20 June, the rise in the BDD preceded a fall in the Bitcoin price two days later.
While the BDD rose again in April and May, after the end of the hype cycle in December 2017 and January 2018, the BDD has continued to fall since June. Particularly in view of the sharp rise in trading volume in July 2018, the BDD thus points to long-term investors holding their bitcoins in cold wallets and “hodling” instead of panic selling due to the current bear market. While the average BDD per transaction in June was still around 41.9, the average BDD in August was only 21.1.
The low BDD also indicates that the BTC trading volume comes primarily from “new” or bitcoins that have not been in the hands of traders for that long.
Overall, the Bitcoin Days Destroyed index currently clearly shows the mood among “Hodlers” and whales. This seems to be predominantly positive. The majority seem to expect a rising bitcoin price.
Whether the BDD is correct as an indicator, however, can only show the next days and weeks. Currently (at the time of writing) a BTC for 7,085 USD is traded and has recorded a small increase of 1.54 percent over the last 24 hours.