I don't quite get how that's a measure of transaction volume, more a measure of "long-stored" coins finally getting moved. Which is more a "feathers being ruffled" meter rather than a transaction volume meter.
Yes, but in a sense it's also a measure of economic activity. Transaction volume alone may often be the result of a small portion of bitcoins being moved around a lot, while BDD means a larger part of the bitcoin economy is active.
A sharp increase in BDD may indeed signal that hoarders are about to sell. But a slow increase (specifically, an increase in the ratio of BDD to transaction volume) may signal a broader awakening of the bitcoin economy.
Imagine a perfectly active economy, in which coins were sent the moment they are received.
That'd mean 0 days are destroyed, right?
So what the heck?
Well technically yes, but that's not possible. Imagine, instead, an economy in which coins are sent 1 millisecond after they are received.
Actually, imagine two economies: A. All coins are sent 1 millisecond after being received. B. Half of coins are sent 0.5 milliseconds after being received, and the other half never move at all.
BDD, but not transaction volume, will distinguish the two economies.
More practically speaking, I think a sustained change in BDD can tell you something about changes in overall market participation. Maybe BDD on its own means nothing, but an increase in the BDD to transaction volume ratio over time may signal more players actively participating in a transaction economy.
