Bitcoin’s recent decline over four days to $104,000 has sparked what analysts refer to as a “defensive rotation” among crypto investors, but onchain data indicates that this correction serves as a healthy reset rather than signaling a broader market crash.
Last week, Bitcoin (BTC) plummeted for four days, dropping from $115,000 on October 14 to a four-month low of $104,000 by Friday, a level not observed since June, according to TradingView data.
Despite this downturn, analysts noted that the correction eliminated excess leverage, encouraging investors to transition from speculation to capital protection.
In a report released Tuesday, blockchain analytics firm Glassnode highlighted a rise in short-term Bitcoin holder supply, suggesting that “speculative capital” is capturing a larger portion of the market.
“Onchain metrics show an increase in short-term holder supply, indicating that speculative capital is gaining prominence,” Glassnode stated, elaborating:
“These signals suggest a market transitioning into a protective stance, with traders emphasizing capital preservation over directional speculation.”
Additionally, Bitcoin’s open interest dropped by around 30%, indicating that the crypto market is “far less susceptible to another liquidation cascade,” according to Glassnode in a Tuesday X post.
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Bitcoin’s surge to $0.2 million signifies “hard time” for “paper hand” investors: Samson Mow
Glassnode’s report appears amid increasing uncertainty surrounding the trajectory of the cryptocurrency market cycle.
“The $0.1M to $0.2M range is particularly challenging for those lacking strong conviction to HODL Bitcoin,” stated Jan3 CEO, Samson Mow, in a Monday X post, further noting:
“There’s uncertainty because the ‘cycle’ hasn’t unfolded like previous times, compounded by other assets like gold experiencing gains.”
Mow forecasted that Bitcoin “will soon add a zero,” while cautioning that “paper hands” investors with weak conviction should not allow themselves to be deterred by this temporary correction.
Related: DeFi surges as $11B Bitcoin whale generates ‘Uptober’ optimism: Finance Redefined
At the same time, long-term Bitcoin holders continue to sell to institutional investors, as noted by Glassnode analyst Chris Beamish.
Digital asset treasuries (DATs) and exchange-traded funds (ETFs) have absorbed a “massive amount” of the long-term holder supply, yet Bitcoin’s upside potential will remain constrained until this group halts its sell-off, the analyst remarked in a Monday X post.
Furthermore, Bitcoin ETFs have faced challenges due to political instability linked to President Donald Trump’s renewed tariff threats against China.
On Monday, Bitcoin ETFs saw net outflows of $40 million, marking the fourth consecutive day of selling, as reported by Cointelegraph.
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