The following is from a recent issue of Deep Dive, Bitcoin Magazine’s premium market newsletter. To be among the first to get this insight and other Bitcoin market analysis delivered to your inbox, sign up now.
The topic of today’s Daily Dive will be the shattered coin days and an examination of the latest trends surrounding this metric. The metric “Coin Days” was first addressed by Bytecoin in the BitcoinTalk forum in 2011 as “Bitcoindays Destroyed”.
“Coin days” refers to the total number of days a coin has remained dormant. If a Bitcoin did not move in exactly one year, this coin would have accumulated 365 coin days. If 365 Bitcoin last moved a day ago, it would also be worth 365 coin days.
So if you look at the coin days destroyed, the metric takes all of the individual coins (technically: UTXOs) that moved during a given day and multiplies them by the number of days those coins were previously inactive. In summary, this number gives us coin days destroyed on a given day. A look at this metric can give a sense of the activity of older investors and indicate whether bitcoins made over the network are from new or old owners.
Just looking at the coin days destroyed is not particularly useful as the daily data is clouded by large outliers, but for the sake of context, below is the daily chart of the coin days destroyed throughout Bitcoin’s history:
When applying a 7 day moving average to the data, the data is still not very useful, but trends are becoming increasingly visible. When using Coin Days Destroyed Data, applying moving averages with longer time frames gives investors a clearer view of investor / HODLer trends.
Throughout Bitcoin’s history, large parabolic price spikes have been faced with large spikes in the shattered coin days as investors (rightly) get some returns on their investment. At the peak of 2013, 2017, and most recently 2021, large amounts of Coin Days were destroyed, and this can be seen quite clearly below:
If one looks at the rolling 90-day total (other than the moving average) of the destroyed coin days, clear trends emerge in the history of Bitcoin.
What is interesting, however, is that unlike other bull runs that saw a blow-off top, the steep downtrend in 90-day coin days that followed the big spike in the metric and the local price spike, we have seen how the price reacted in a meaningful way is currently up around 70% in the past five weeks, yet the 90-day coin destroyed metric continues to drop to near 5-year lows.