Review of Bitcoin’s ‘Days of Coins Destroyed’

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The following is taken from a recent edition of Deep Dive, Bitcoin Magazine’s high-end market newsletter. To be among the first to receive this and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

The topic of today’s Daily Dive will be the days of destroyed parts and a review of recent trends surrounding this measurement. The “coin days” metric was first mentioned as “bitcoindays destroyed” by Bytecoin on the BitcoinTalk forum in 2011.

“Room days” refer to the total number of days a room has been dormant. If a bitcoin hasn’t moved for exactly one year, then that coin would have accumulated 365 days of coins. Likewise, if 365 bitcoins were last moved a day ago, that would also be worth 365 days of coins.

So when looking at the days of parts destroyed, the metric takes all the individual parts (technically: UTXOs) that have moved in a given day and multiplies them by the number of days that those parts are. previously dormant. In total, this number gives us the days of parts destroyed for a given day. Examining this metric can give an idea of ​​the activity of older investors and whether bitcoins traded on the network are from new or old holders.

Looking at coin destroyed days alone 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 coin destroyed days throughout the day. history of bitcoin:

Bitcoin: days of coins destroyed

Bitcoin: days of coins destroyed (7-day moving average)

When applying a seven-day moving average to the data, the data is still not very useful, but the trends are becoming more and more visible. When using coin day destroyed data, applying moving averages with longer time frames gives investors a clearer insight into investor / HODLer trends.

Throughout bitcoin’s history, big parabolic price advances have met with sharp increases in the number of days of coins destroyed, as (rightfully) investors are making gains on their investment. The peak of 2013, 2017 and more recently 2021 saw large amounts of coins destroyed, and this can be seen quite clearly below:

Bitcoin: 90 days of destroyed coins

When looking at the 90-day rolling sum (different from the moving average) of coin destruction days, clear trends emerge over the course of bitcoin’s history.

It is quite interesting, however, that unlike other bull races that have seen explosive highs, the strong downtrend of the 90-day coin-days has been destroyed following the sharp rise in the metric and the local price peak, we have seen prices react significantly. way, currently up about 70% over the past five weeks, but the 90-day parts destroyed metric continues to drop to its lowest level in five years.

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