Bitcoin's four-day drop to $104,000 sparked what analysts call a “defensive rotation” amongst crypto investors, but on-chain data suggests the correction was more of a healthy reset than the beginning of a broader market crash.
Bitcoin (BTC) suffered a four-day slump last week, falling from $115,000 on Oct. 14 to a four-month low of $104,000 on Friday, a level last reached in June, data from TradingView shows.
Despite the decline, analysts said the correction eliminated excess leverage, prompting investors to modify from chasing profits to protecting capital. In a report on Tuesday, blockchain analytics firm Glassnode said the short-term supply of Bitcoin holders has increased, suggesting that “speculative capital” is capturing a bigger market share.
BTC/USD, 1-day chart, Source: Cointelegraph/TradingView
“Onchain, the share of short-term bearer supply continues to rise, suggesting that speculative capital is becoming more dominant,” Glassnode said, adding:
“This combination of signals suggests the market is entering protection mode, with traders prioritizing capital preservation over directional bets.”
Meanwhile, open interest in Bitcoin fell by about 30%, suggesting the crypto market is “far less vulnerable to a different liquidation cascade,” Glassnode said in a Tuesday post on X.
Bitcoin’s Rise to $0.2 Million Means “Tough Times” for “Paper Hand” Investors: Samson Mow
Glassnode's report comes at a time of growing uncertainty surrounding the continuation of the cryptocurrency market cycle.
“This range of 0.1 million.
“They are uncertain since the ‘cycle’ has not happened as before and since other assets akin to gold are also rallying.”
Mow predicted that Bitcoin “will add a zero soon enough,” but warned that “paper-handed” investors with weak conviction shouldn’t be fazed by the temporary correction.
Meanwhile, long-term Bitcoin holders proceed to sell to institutional investors, in line with Glassnode analyst Chris Beamish.
Digital asset treasuries (DATs) and exchange-traded funds (ETFs) have absorbed an “incredible amount” of supply from long-term holders, but Bitcoin's upside potential will remain limited until this cohort stops selling, the analyst wrote in a Monday post.
Bitcoin ETFs have also been hit by the political unrest surrounding President Donald Trump's renewed tariff threats against China.
As Cointelegraph reported, Bitcoin ETFs recorded $40 million value of net outflows on Monday, marking the fourth consecutive day of selling.
