- Long-term holders have started distributing their coins.
- On-chain data suggested that Bitcoin was overheating.
Bitcoins [BTC] According to data from CryptoQuant, the number of Coin Days (CDD) destroyed has reached a five-year high. Maartunn, an author on the on-chain analytics platform, also discussed this in a recent article.
“Coin Days Destroyed” measures the number of days Bitcoins have been inactive multiplied by transaction volume.
In the past, when CDD peaks at the 60-day moving average (MA), it means that long-term holders are distributing their coins.
Source: CryptoQuant
In this case, Bitcoin experienced a significant correction. Maartunn also admitted this in his post, saying:
“This pattern suggests that there is a distribution of older coins during the bullish phase. In historical context, it could take up to 5 months for Bitcoin to peak.”
Cuts in the middle
At press time, BTC was changing hands at 69,663, indicating that the coin has been moving sideways over the past 24 hours. Further insight into Bitcoin's on-chain status showed that activity on the network had decreased.
As of this writing, the number of 24/7 active addresses is 706,000. A few days ago the number was over 1 million. Therefore, the recent decline suggests that BTC’s successful transactions have declined.
If the network lacks impressive activity, this may impact the price as demand may be low. If this is the case, the price of Bitcoin could fall below $69,000.
In addition to active addresses, AMBCrypto also examined the network value to transactions (NVT) ratio. This metric indicates whether an asset is overvalued or undervalued depending on the ability to transact coins.
A low NVT ratio indicates that transaction volume is growing faster than market capitalization. In this case, investor sentiment could be described as bullish.
Source: Santiment
However, Bitcoin's NVT ratio was high at 405, indicating that investor sentiment was bearish. This relatively high network ratio was a sign that BTC was overvalued given the current market situation.
It's either here or there
Crypto analyst Ali Martinez also shared his short-term view on Bitcoin in a post on X (formerly Twitter).
According to Martinez, if the bulls fail to hold the support at $68,300, the price of the coin could fall to $63,150.
On the other hand, the analyst mentioned that the price of Bitcoin could rise if the coin retests the $70,320 level.
Source: X
From the looks of it, the price of Bitcoin could decline ahead of the halving, which is scheduled for April 19th. As the story goes, the coin experiences high volatility as the halving approaches.
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This time it shouldn't be any different. But it seemed like Bitcoin had almost completed its pre-halving rally and a downturn could be next.
Meanwhile, BTC could cross $70,000 this cycle. However, current conditions suggest this may not happen for four years.
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