It is possible that a large bitcoin transfer associated with law enforcement in the United States has caused the chain to increase in scale.
On March 8, addresses linked to the US government transferred 49,000 bitcoins seized on Silk Road, worth $1 billion. The transfer was accompanied by bitcoins
BTC
pointers down
$20,557
Price drops below $22,000 and keychain gauge increases significantly.
But does that mean traders should be prepared for potential Bitcoin price volatility in the future?
Bitcoin’s CDD counter suddenly increases
The BTC move likely caused a significant increase in Glassnode’s Coin Destructive Days (CDD) gauge. It measures the weighted movement of a bitcoin based on the last time it was transferred 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 CDD rally usually precedes price volatility, with bears usually having a slight advantage. However, some long-term investors may also move Bitcoin to profit for more bullish gains in the futures market.
Bitcoin’s On-Chain Data Shows No Major Signs of Selling
But the current CDS surge to a two-month high does not necessarily indicate that the $1,000-$1,500 price move is brewing.
For example, trade flow data does not yet show significant benefits. Instead, around 5,000 BTC (worth around $100 million) have been withdrawn from exchanges in the past 24 hours.
Therefore, the $215 million transfer to Coinbase has had little price impact so far. However, with only around 20% moving to a trade on 49,000 BTC, the risk of further selling pressure remains.
Currently, the BTC/USD pair is trading above the support between $21,500 and $21,950, which is encouraging for buyers despite this week’s string of negative news. Further confirmation will arrive with consecutive daily closes above this support zone.
