Bitcoin’s four-day drop to $104,000 triggered what analysts call a “defensive rotation” among crypto investors, but onchain data suggests the correction was a healthy reset rather than the start of a broader market crash.
Bitcoin (BTC) experienced a four-day crash last week, falling from $115,000 on Oct. 14 to a four-month low of $104,000 by Friday, a level last seen in June, TradingView data shows.
Despite the decline, analysts said the correction flushed out excess leverage, prompting investors to shift from chasing gains to protecting capital.
In a report Tuesday, blockchain analytics firm Glassnode said short-term Bitcoin holder supply has risen, signaling that “speculative capital” is taking a larger share of the market.
“Onchain, the short-term holder supply share continues to rise, suggesting that speculative capital is becoming more dominant,” Glassnode said, adding:
“This combination of signals points to a market shifting into protection mode, with traders prioritizing capital preservation over directional bets.”
Meanwhile, Bitcoin’s open interest fell by about 30%, signaling that the crypto market is “far less vulnerable to another liquidation cascade,” said Glassnode in a Tuesday X post.
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Bitcoin’s rise to $0.2 million spells “hard time” for “paper hand” investors: Samson Mow
Glassnode’s report comes amid a period of growing uncertainty related to the continuation of the cryptocurrency market cycle.
“This $0.1M to $0.2M range is a hard time for those with weak conviction to HODL Bitcoin,” the Jan3 CEO, Samson Mow, wrote in a Monday X post, adding:
“They’re uncertain because the “cycle” didn’t happen like before, and also because other assets like gold are rallying.”
Mow predicted that Bitcoin “will add a zero soon enough,” but warned that “paper hands” investors with weak conviction should not get shaken out by the temporary correction.
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Meanwhile, long-term Bitcoin holders continue selling to institutional investors, according to Glassnode analyst Chris Beamish.
Digital asset treasuries (DATs) and exchange-traded funds (ETFs) have absorbed an “incredible amount” of the long-term holder supply, but Bitcoin’s upside will remain limited until this cohort stops selling, the analyst wrote in a Monday X post.
Bitcoin ETFs have also been hit by the political turmoil surrounding President Donald Trump’s renewed tariff threats against China.
On Monday, the Bitcoin ETFs recorded $40 million worth of net outflows, marking their fourth consecutive day of selling, Cointelegraph reported.
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