Bitcoin has surged by 8.47% over the past 72-hours, registering its largest change since the start of June. The significant rise allowed Bitcoin to re-test $10,000 for the 4th time since May 5th, as the asset was valued at $10,250 at the time of writing.
However, in comparison to the previous $10,000 re-test witnessed during the month of May and June, a major on-chain fundamental indicated a stark difference between the present and past rallies.
Glassnode analysis revealed on Twitter that Bitcoin Days Destroyed exhibited by BTC has been majorly different than the previous two times Bitcoin reached $10,000.
On previous occasions, BDD registered by the largest digital asset was on a high, whereas this time, Bitcoin projected a low BDD index.
What is Bitcoin Days Destroyed index?
Bitcoin Days Destroyed is a measure of the economic activity which gives weightage to the coins that haven’t been spent for particular period of time. It is also used to understand the transaction volume associated with Bitcoin during a bullish rally or bearish pullback.
Last month, Rafael Schultze-Kraft, Glassnode CTO had cited the importance of Bitcoin Days Destroyed metric. He suggested that the BDD index has been rapidly decreasing over the past five years, and suggested that a low BDD index meant higher long-term holding sentiment. He added,
“Similarly, Bitcoin Binary Coin Days Destroyed (= number of days per year in which more coins were destroyed compared to the historic average) has never been as low as in 2020.”
Bitcoin’s hodling activity has been largely prevalent in 2020 hence the recent rally being backed with low BDD exhibited the fact that transaction volume attached to the present rise is extremely less.
Bitcoin Mempool Transaction declining as well
Now, the mempool transaction count registered by Bitcoin during the rally supported the drop in transaction volume. As observed in the above chart, the total number of unconfirmed transactions for Bitcoin has drastically dropped during the 26th July period, which suggested that the network is less congested than it was a few days back.
The trend should have been directly opposite but the rally has witnessed less transaction going on its network.
With little clarity in the network, Bitcoin’s current positive scenario is riddled with uncertainty, as the situation is expected to attain more direction in the next few days.