Bitcoin OGs Prep for Profit Sell-Off Ahead of Halving, According to Key Crypto Trading Indicator
Summary:
Early Bitcoin (BTC) investors are preparing to sell off their profits, according to the Value Days Destroyed (VDD) Multiple, a key indicator. The VDD Multiple has seen a rise recently, fueling speculation that the bull run may end. The indicator identifies potential peaks in Bitcoin's price during significant market cycles, with a higher reading indicating a larger amount of Bitcoin likely to be sold. With the Bitcoin halving approaching, the finances are exceeding levels seen before previous halving events. This could be a result of significant outflows from Grayscale's Bitcoin Trust (GBTC).
Early Bitcoin (BTC) investors seem to be preparing to sell off their profits ahead of the Bitcoin halving, as indicated by a key indicator favored by cryptocurrency traders. The Value Days Destroyed (VDD) Multiple, a leading indicator, recently increased above 4.0. This stirred speculation among crypto analysts regarding the potential end of the current bull run. "Has on-chain momentum reached its peak?" wondered the anonymous trader TXMC Trades in a post to their 83,200 X followers on April 10.
The VDD Multiple is designed to pinpoint instances where Bitcoin's price may indicate overheating or nearing a peak during significant market cycles. A higher reading on the VDD Multiple suggests a larger quantity of Bitcoin swiftly infiltrating the market - likely for selling purposes. Calculating it involves multiplying the existing Coin Days Destroyed metric by Bitcoin's current price to track spending velocity over time.
Currently, the VDD stands at 3.03, after briefly rallying to 4.21 on March 28. Since the year started, there has been a twofold increase, with the VDD Multiple floating around 2.04 on January 1, per GlassNode data. The VDD Multiple indicator reached a peak of 4.4 in April 2013.
The VDD exceeded 4 the last time in January 2021 when Bitcoin was valued at $40,257. The brief spike did not trigger a market downturn, with Bitcoin's price rebounding and climbing. By March 2021, just two months later, Bitcoin's price had leaped a staggering 52.2% to $61,283, according to CoinMarketCap data.
With only nine days left until the Bitcoin halving, the cryptocurrency has breached the levels seen before previous halving events. The VDD Multiple was recorded at 0.419 in the period preceding the July 9, 2016 halving, while it was at 1.606 just ten days before the 2020 Bitcoin halving.
A senior Glassnode researcher known as CryptoVizArt on X attributed the rising VDD Multiple levels to massive outflows from Grayscale’s Bitcoin Trust (GBTC). “The movement of Grayscale coins since January 10, in both volume and age, has propelled the VDD to unprecedented highs,” stated the researcher in an April 10 post.
The Securities and Exchange Commission approved Bitcoin spot exchange-traded funds (ETF) for trading on January 10. Since receiving the green light, GBTC has seen a total of $15.96 billion in assets exit the fund, Farside data reveals. High GBTC fees relative to other Bitcoin ETFs have been cited as a contributing factor to outflows.
Bitcoin has seen a robust 56% growth since January 1 of this year, soaring from $44,172 to its present price tag of $69,260 at the time of writing.
Remember, this article does not comprise investment advice or suggestions. Each investment or trading move carries inherent risk, and individuals should conduct personal research before making any financial decisions.
Published At
4/10/2024 10:57:30 AM
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