Rate-Cut Sell-Off Came From Short-Term Traders

Spent Output Age Bands (SOAB) data confirmed that the recent panic selling came from “hot money,” not diamond hands.

When the U.S. Federal Reserve cut interest rates on October 29, the price of Bitcoin (BTC) dropped sharply, prompting traders to send more than 10,000 BTC to Binance and raising questions about whether it was a “sell the news” event or the start of a new crypto winter.

But a CryptoQuant analyst has now released new information that shows that most of the selling was done by one group: traders who had only held their Bitcoin for less than a day.

The Real Story in the Data

Bitcoin’s price dropped after the Fed announced it would cut rates by 0.25%, going from about $112,000 to a weekly low of around $106,500 per CoinGecko. This reverberated around the whole crypto market, causing more than $1.1 billion in trading positions to be closed.

The initial evidence pointed to a bearish turn, a feeling made even more believable when data showed that thousands of BTC went into Binance on October 30, something that usually happens before a sale.

However, market technician CryptoOnchain shared crucial context coming from a specific on-chain metric known as Spent Output Age Bands (SOAB). This tool sorts Bitcoin transactions based on how long they had been sitting still before they were moved. His research showed that 10,009 BTC of the October 30 Binance inflow came only from units that had been held for less than 24 hours.

“This is the signature of ‘hot money’—short-term traders and speculators reacting instantly to the news,” the expert stated.

His report went further to emphasize the clear divide with long-term investors, noting:

“In stark contrast, the inflow from Long-Term Holders (coins aged 6+ months) was negligible. The market’s ‘diamond hands’ stood firm.”

This divergence proves that the selling pressure did not come from the foundational investor base that has accumulated Bitcoin over the years. Instead, it was driven entirely by the most reactive participants, those who buy and sell based on hourly headlines.

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A Pattern of Short-Term Panic

This behavior fits a pattern noted by another analyst, Amr Taha, who pointed out that short-term traders on Binance sold about $1 billion worth of Bitcoin on October 30. Their activity coincided with huge outflows from spot Bitcoin ETFs the day before, including large withdrawals from funds managed by BlackRock and Fidelity.

According to Taha, this combination of selling from exchange users and ETF investors has historically been a sign of a local market bottom forming from panic, rather than the start of a prolonged downturn.

At the time of writing, the flagship cryptocurrency was down 0.9% in the last 24 hours to trade at around $109,725. The price also reflects a drop of about 1% for the week and 4% for the month, even though BTC remains up more than 52% in the past year.