On March 8, an address linked to the US government moved 49,000 bitcoins (worth $1 billion) seized from the Silk Road. Along with this transfer, the price of Bitcoin (BTC) fell below his $22,000 mark and the keychain metric rose significantly.
But does this mean that traders should prepare for potential volatility in the BTC price?
Bitcoin’s CDD indicator surges
BTC transfers may have caused a significant increase in Glassnode’s Coin Destruction Days (CDD) metric. Measures the weighted movement of Bitcoin based on the time the Bitcoin was last moved from an address.
CDD is calculated by multiplying the amount of Bitcoin transferred by the number of days since BTC was last added to the address.
A spike in the CDD indicator usually precedes a price move and is usually slightly in favor of the bears. However, some long-term investors may also move Bitcoin to leverage it for more upside gains in the futures market.
Bitcoin On-Chain Data Shows No Signs Of A Big Sell
However, the current CDD two-month high does not necessarily imply a $1,000 to $1,500 price move.
For example, exchange inflow data has yet to show any major spikes. Instead, about 5,000 BTC (worth about $100 million) was moved off the exchange in the last 24 hours.
So the transfer of $215 million to Coinbase has so far had little impact on the price. However, with only about 20% of the 49,000 BTC moving to exchanges, the risk of mounting selling pressure remains.
The BTC/USD pair is currently trading above the support between $21,500 and $21,950, which is encouraging for buyers despite a lot of negative news this week. Further confirmation arrives with consecutive daily closes above this support area.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.
