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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 last Tuesday to a four-month low of $104,000 by Friday, a level last seen in June, TradingView data shows.
Despite the steep 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.
BTC/USD, 1-day chart, Source: Cointelegraph/TradingView
“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.”
Bitcoin weekly options metrics changes. Source: Glasnode
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.
Related: Elon Musk touts Bitcoin as energy-based and inflation-proof, unlike ‘fake fiat’
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,” 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.
Source: Samson Mow
Related: DeFi booming as $11B Bitcoin whale stirs ‘Uptober’ hopes: Finance Redefined
Meanwhile, long-term Bitcoin holders continue selling to institutional investors, according to Glassnode analyst Chris Beamish.
Source: 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.
However, 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.
Magazine: Bitcoin is ‘funny internet money’ during a crisis: Tezos co-founder
