Following the U.S. Federal Reserve's interest rate cut on October 29, Bitcoin (BTC) experienced a sharp price decline. This event prompted traders to send over 10,000 BTC to Binance, sparking debate about whether it signaled a "sell the news" scenario or the onset of a new crypto winter.
However, new data released by a CryptoQuant analyst indicates that the majority of this selling activity was conducted by a specific group: traders who had held their Bitcoin for less than a day.
Analysis of On-Chain Data Sheds Light on Market Activity
Bitcoin's price fell from approximately $112,000 to a weekly low of around $106,500 per CoinGecko after the Fed announced a 0.25% rate reduction. This market movement impacted the broader cryptocurrency landscape, leading to the liquidation of over $1.1 billion in trading positions.
Initial observations suggested a bearish trend, a sentiment amplified when data revealed that thousands of BTC were transferred to Binance on October 30, a common precursor to sell-offs.
Contrary to initial assumptions, market technician CryptoOnchain utilized the Spent Output Age Bands (SOAB) metric, an on-chain tool that categorizes Bitcoin transactions by their holding duration. His analysis demonstrated that the 10,009 BTC inflow to Binance on October 30 originated solely from coins held for less than 24 hours.
This is the signature of ‘hot money’—short-term traders and speculators reacting instantly to the news.
The report further highlighted a significant distinction between this short-term trading activity and the behavior of long-term investors.
In stark contrast, the inflow from Long-Term Holders (coins aged 6+ months) was negligible. The market’s ‘diamond hands’ stood firm.
This clear divergence suggests that the selling pressure did not stem from the core investor base that has accumulated Bitcoin over extended periods. Instead, the market reaction was primarily driven by highly reactive participants who engage in trading based on immediate news cycles.
Observed Patterns of Short-Term Trader Behavior
This behavior aligns with observations made by another analyst, Amr Taha. Taha noted that short-term traders on Binance sold approximately $1 billion worth of Bitcoin on October 30. This selling activity coincided with substantial outflows from spot Bitcoin ETFs the previous day, including significant withdrawals from funds managed by BlackRock and Fidelity.
According to Taha, the combined selling pressure from both exchange users and ETF investors has historically indicated the formation of a local market bottom driven by panic, rather than the beginning of a sustained downturn.
As of the latest reporting, Bitcoin was trading at approximately $109,725, reflecting a 0.9% decrease in the last 24 hours. The price also showed a weekly decline of about 1% and a monthly decrease of 4%. Despite these short-term fluctuations, BTC has maintained a year-to-date gain of over 52%.