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Bitcoin’s On-Chain Momentum and VDD Multiple Indicator
Bitcoin’s on-chain momentum is showing signs of a potential slowdown, with the Value Days Destroyed (VDD) Multiple indicator surging above 4.0 pre-halving. This has led to speculation among crypto traders about the end of the current bull run.
The VDD Multiple Indicator
The VDD Multiple is a popular indicator that identifies instances where the price of Bitcoin may be overheating and approaching its peak during major market cycles. A higher reading on the VDD Multiple suggests a significant influx of Bitcoin sales in the market. It is calculated by multiplying the Coin Days Destroyed metric by the current Bitcoin price, effectively analyzing spending velocity over time.
VDD Multiple Indicator Doubled Since Start of the Year
Currently standing at 3.03, with a brief spike to 4.21 on March 28, the VDD Multiple has doubled since the beginning of the year when it hovered around 2.04 on January 1, according to data from GlassNode. The last time the VDD Multiple exceeded 4 was in January 2021 when Bitcoin was priced at $40,257.
However, the previous peak before a cooldown did not result in a market downturn. Bitcoin’s price promptly surged, with a 52.2% increase to $61,283 just two months later in March 2021.
Bitcoin Halving Impact on the Bull Run
With the Bitcoin halving just nine days away, the current VDD Multiple levels have surpassed those observed before previous halving events. A senior researcher at GlassNode attributed the recent surge in the VDD Multiple to substantial outflows from Grayscale’s Bitcoin Trust (GBTC).
Since the approval of spot Bitcoin ETFs for trading by the U.S. SEC, GBTC has experienced significant outflows, shedding a total of $15.96 billion in assets. Bitcoin has seen a 56% surge since the beginning of the year, rising from $44,172 to its current price of $69,260 at the time of publication.
The CEO of Marathon Digital Holdings Inc. believes that the ETF approval has attracted capital into the market and brought forward some of the demand that could have been seen post-halving. Billionaire Arthur Hayes has expressed a cautious view regarding the upcoming Bitcoin halving, suggesting that the price action could be negative.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
