Is Bitcoin’s on-chain bull run momentum over? Indicator flashes red

Bitcoin (BTC) Old-timers seem prepared to sell their profits before the upcoming Bitcoin halving event, based on a widely used signal among cryptocurrency investors.

The Value Days Destroyed (VDD) index has surpassed 4.0, causing crypto experts to ponder if this signal might mean the broader market’s bullish trend is coming to an end.

“Has the on-chain momentum peaked for TXMC Trades’ 83,200 X followers, as they inquired in a recent April 10 post?”

Is Bitcoin's on-chain bull run momentum over? Indicator flashes red

The VDD Multiple serves as a warning sign when the cost of Bitcoin may be getting too high during significant market trends, potentially indicating that it’s close to reaching its maximum point.

With a greater voltage difference (VDD), a higher reading suggests a bigger influx of Bitcoins being introduced into the market, which are probably up for sale.

The spending rate of Bitcoins is determined by multiplying the previous amount of destroyed coins by the current Bitcoin price.

At present, it is at 3.03, momentarily reaching 4.21 on March 28th. According to GlassNode statistics, this figure has more than doubled from its beginning-of-the-year value of approximately 2.04 on January 1st.

Is Bitcoin's on-chain bull run momentum over? Indicator flashes red

The last time the VDD multiple went above 4 was in January 2021, when Bitcoin was $40,257.

Despite a momentary increase prior to a decline not causing a market crash, Bitcoin‘s value remarkably rose by 52.2% within two months, reaching $61,283 in March 2021, according to CoinMarketCap figures.

In just nine more days, the Bitcoin halving will take place, and its current value has already exceeded previous levels seen prior to past halving occasions.

Ten days prior to the Bitcoin halving in 2020, the VDD multiple was 1.606, compared to its value of 0.419 during the same time period before the last halving in July 2016.

A senior researcher at Glassnode with the handle CryptoVizArt explained on platform X that Grayscale’s Bitcoin Trust (GBTC) caused the significant increases in the VDD metric by withdrawing large amounts of Bitcoin.

“The amount and older coins of Grayscale that have been transferred since January 10th have driven up the price of VDD to new records,” he noted in a post on X, dated April 10th.

Starting on January 10th, the SEC in the United States gave the go-ahead for traders to buy and sell Bitcoin spot exchange-traded funds (ETFs). Since then, data from Farside shows that GBTC has experienced a significant decrease in assets, amounting to $15.96 billion.

The higher fees charged by the fund compared to other Bitcoin ETFs were cited as a contributing factor to the large-scale withdrawals.

The price of Bitcoin has experienced a significant increase, rising from $44,172 on New Year’s Day to reach its present value of $69,260 as we speak, marking a 56% gain over the past year.

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2024-04-10 11:02