The cryptocurrency market is full of transaction data. Knowing what Bitcoin Days Destroyed is crucial to have a consistent investment strategy.
Like any financial market, the cryptocurrency market is full of metrics that allow understanding the situation it is in. From the volume of transactions per day to price variations and the ranking of the main exchanges, all these data allow users to plan a better investment strategy.
However, the Bitcoin Days Destroyed is one of the most important metrics in the crypto world that few people know about. The following explanations can help readers understand its meaning and importance.
Bitcoin Days Destroyed (BDD)
The crypto world is full of so many data and figures that sometimes it is difficult to locate the necessary information to know how to act within the market, at a given time. To make matters even worse, users can find data that they do not know for certain. This is the case, on many occasions, of the Bitcoin Days Destroyed (BDD).
The Bitcoin Days Destroyed is a measure to visualize the volume of transactions conducted in the crypto market. Multiplying the amount of Bitcoin traded during any operation by the number of days that have elapsed since the last movement of that same amount allows users to measure this value.
In other words, if an investor buys 100 BTC on Monday and sells that amount on Friday, five days have passed. By multiplying this period by 100 BTC, it is possible to obtain a total of 500 BTC. However, if the person who bought the cryptocurrencies re-sells them on Sunday, two days will have passed, so the BDD value will be 200 BTC.
Usefulness of the BDD
Although the concept of the Bitcoin Destroyed Days is not difficult to understand through an example like the previous one, it is still necessary to clarify its usefulness in practical terms. At the end of the day, knowing the multiplication between the amounts of Bitcoin traded and the number of days since their last operation is not at all obvious for users.
In this sense, the importance of the BDD is that it is a metric of the collective behavior of investors in the long term. Thanks to the use of Bitcoin Days Destroyed, any user or investor in the cryptocurrency world can observe the trends of large Bitcoin holders.
Therefore, when this metric begins to increase, it is possible to know that holders are trading with their cryptocurrencies. If it decreases, there is a tendency for users to save rather than trade. All this allows them to be more effective in planning their investment strategy.
This information, in addition to other metrics shown in previous Crypto World Journal articles, helps users to make more consistent decisions when investing. By being able to visualize the trading volume of the main cryptocurrency in the market, they can predict how much they can earn from their operations.
By Alexander Salazar
