Don't panic, the current BTC: VDD indicator has entered the bottom range 😼

"Value Days Destroyed Multiple" (VDD Multiple) is an on-chain metric used to analyze Bitcoin market behavior, primarily to assess the spending velocity and market conditions of Bitcoin. It is based on the foundational concept of "Coin Days Destroyed" (CDD) and is derived from further processing and calculations.

Definition and Calculation

1. Coin Days Destroyed (CDD):

CDD measures the number of coin days that are "destroyed" when Bitcoin moves on-chain. Coin days are the accumulated time a Bitcoin is held without being moved; for example, if 1 BTC is held for 100 days without movement, it accumulates 100 coin days. If this 1 BTC is transferred or spent, those coin days are "destroyed" and counted towards CDD.

Calculation formula: CDD = Number of Bitcoins moved × Number of days since the last movement.

2. Value Days Destroyed (VDD):

VDD introduces the price factor of Bitcoin into CDD by multiplying CDD by the BTC price at that time (in USD), thus reflecting the "economic value" of the destroyed days. This allows the metric to better compare spending behavior across different price cycles.

Calculation formula: VDD = CDD × BTC price

3. Value Days Destroyed Multiple (VDD Multiple):

VDD Multiple is calculated by dividing the short-term (typically 30 days) average of VDD by the long-term (typically 365 days) average of VDD, yielding a ratio. This ratio reflects the comparison of recent spending velocity to the annual average spending velocity.

Calculation formula: VDD Multiple = 30-day VDD average ÷ 365-day VDD average

VDD is mainly used to identify cyclical highs and lows in the Bitcoin market.