This class is very important because a lot of data will refer to CDD
Before this, you must first understand the concept of UTXO. Please read the previous courses. Thank you.
CDD (Coin Days Destroyed, coin daysdestroy) is a measure of economic activity that places greater emphasis on UTXOs (i.e. coins) that have not been spent for a long time.
Coin Days Burned is a measure of economic activity that places greater emphasis on coins that have not been spent for a long time.
Coin days burned is considered an important alternative metric compared to total transaction volume.
Total transaction volume may not accurately represent economic activity, especially if value is not stored for long periods of time. Conversely, when long-term holders spend coins stored in cold storage, it represents a significant change in long-term holder behavior.
Unspent coin units accumulate a "coin day" each day.
When this coin is finally spent, the accumulated coin days will be reset to zero (because a new UTXO is exchanged), that is, it will be "destroyed", recorded through the CDD indicator.
The total amount of coins burned in a certain period of time (CDD indicator value) depends on the number of coins spent multiplied by the age of those coins.
A UTXO of 2 BTC that has been dormant for 100 days has accumulated 200 coin days.
A UTXO of 0.5 BTC that has been dormant for 100 days has accumulated 50 coin days.
A UTXO of 10 BTC that has been dormant for 6 hours (0.25 days) accumulates 2.5 coin days.
The CDD indicator takes into account the duration of the coin and the number of coins, and is an important tool for observing the physical consumption behavior of large households and long-term investors.
CDD is calculated by multiplying the value of a given UTXO by its duration in days. The CDD indicator is the sum of these values for all spent outputs during the selected time frame.
CDD = value × duration (days) (for all spent output)
CDD is particularly sensitive to the following consumer behaviors:
1. Long-lived coins: Each old coin accumulates a large number of coin days.
2. Situation with a large number of coins: Rich investors own a large number of coins, and when they spend their coins, they will destroy a large number of coin days. This indicator makes it easier for us to notice them.
If the same set of coins is sent back and forth, only a maximum of one coin per coin trading unit per day can be destroyed.
3. Situations with both a large number of coins and a long duration: This combined effect will have a greater impact on the CDD indicator.
This indicator also has another meaning. Generally, the public thinks that institutions and long-term investors have relatively strong trading knowledge, so they are more likely to drive changes in the market.
The evaluation derived from the CDD indicator has several directions:
1. High indicator values may indicate that long-term investors are spending their coins to earn more profits, possibly due to market strength, or declining confidence in the asset.
2. Continuously high or trending higher indicator values add weight to conclusions about the consumption behavior of long-term holders. In bull markets, CDDs typically trend upward as long-term holders sell coins during times of market strength, often peaking near local price tops.
3. Low indicator values occur when old coins remain dormant and confidence in holding the asset is high. But it also includes periods of reduced interest in an asset (such as a bear market).
4. Consistently low or trending down indicator values may indicate that long-term holders are starting to hold rather than spend their coins and are therefore a sign of their confidence in the market.
From the above concepts, we can give some examples to illustrate:
1. A CDD value less than 5 million days (amount * days) generally describes daily baseline traffic and has served as a lower limit for the Bitcoin protocol’s accumulated coin days in recent years. CDD values greater than 10 million days are often associated with bull runs and local tops or bottoms in the market due to modest increases in older coins due to spending by long-term holders.
2. CDD values greater than 20 million days are rare in history and tend to only occur during periods of high volatility because more old coins are spent and profits or losses may be realized.
The absolute value of CDD changes over time and must be considered in this context and/or alongside supply-adjusted CDD indicators.
3. CDD usually trends upward in bull markets and returns to lower values during corrections and consolidations. When CDD falls back to lower levels after a period of highs, it may indicate increased confidence among long-term holders in keeping the coin dormant.
Bear markets are also known for low general interest in the asset and dominance of OTC-based trading volume, rather than demand for on-chain trading. This often results in periods of lower CDD values.
The basic principles are not complicated. It is recommended that you read it carefully. This will be very helpful for subsequent UTXO-related analysis.
My favorite exchanges
Paiwang, the first choice for quantitative trading, is also where I use fixed deposits.
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### Binance Exchange
The world's largest exchange with the most functions, the group has a complete currency ecological chain, the platform currency rises rapidly, and is less disconnected, the control of deposit and withdrawal is relatively strict, it takes 24 hours to withdraw the currency after buying, and the risk of freezing the card is low.
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###OKX Ouyi
After years of bulls and bears, a stable exchange that has always been cultivated slowly, is an exchange with high security
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### SesameGate.io
There are a lot of initial coins, and the threshold for grabbing the first coin is relatively close to the people. Only VIPs can buy it. It is also a good place to mine the wealth of new coins. The NFT sector is quite rich and comes with quantitative trading functions. The functions are very rich and it is easier to make money , but it is also easy to encounter garbage coins, so keep your eyes open
2021/5/20 GTEVM starts to go online and will also enter the field of smart contracts