Average Supply-Adjusted Coin Days Destroyed (CDD)

The "Average Supply-Adjusted Coin Days Destroyed" (CDD) indicator for cryptocurrencies is akin to an archaeologist who examines not just the quantity of unearthed artifacts but also takes into account the age of each one. In the world of cryptocurrencies, "coin days" are accumulated by each coin that remains inactive, and a "coin day" is destroyed every time the coin is moved.

Thus, the CDD counts the number of "coin days" that have been accumulated by inactive coins and are "destroyed" when these coins are transferred. For example, if 10 coins that have not moved for 10 days are transacted, 100 coin days have been destroyed.

Adjusting this calculation for the total supply of coins in circulation is like the archaeologist adjusting their findings for the total size of the archaeological site. This provides a proportional metric that considers activity relative to the total amount of coins available. It's a way to normalize the data to provide a fair comparison over time, especially as the total coin supply increases.

The "Average Supply-Adjusted CDD" highlights the proportion of old coins in motion relative to the total supply, offering a perspective on the behavior of long-term holders. A high value might indicate that coins which were inactive for a long time are being transacted, which could signal a significant shift in the market, such as long-term holders realizing profits or reallocating their assets.

Conversely, a low value suggests that few old coins are being moved, implying that long-term holders are maintaining their positions. This metric is a valuable tool for understanding the depth and maturity of the cryptocurrency market, providing insights into the conviction and potential impact of holder movements on the market as a whole.