Bitcoin (BTC) experienced a significant four-day price drop last week, falling from $115,000 to a four-month low of $104,000. This decline, last seen in June, has been interpreted by analysts not as the beginning of a broader market crash, but rather as a healthy reset that has flushed out excess leverage. Onchain data suggests a "defensive rotation" among crypto investors, shifting focus from chasing gains to capital preservation.
Blockchain analytics firm Glassnode reported that the short-term Bitcoin holder supply has risen, indicating that speculative capital is taking a larger share of the market. According to Glassnode's analysis, this trend points to a market shifting into protection mode, where traders are prioritizing capital preservation over directional bets.
“Onchain, the short-term holder supply share continues to rise, suggesting that speculative capital is becoming more dominant. This combination of signals points to a market shifting into protection mode, with traders prioritizing capital preservation over directional bets.”
Further supporting this view, Bitcoin's open interest fell by approximately 30%. Glassnode stated in an X post that this reduction signals the crypto market is "far less vulnerable to another liquidation cascade."
Samson Mow on Bitcoin's Path to $0.2 Million
The recent price correction occurs amidst growing uncertainty about the continuation of the cryptocurrency market cycle. Jan3 CEO Samson Mow commented on the situation, noting that the range between $0.1 million and $0.2 million presents a challenging period for investors with weak conviction. He attributed this uncertainty to the deviation from previous cycle patterns and the concurrent rally in other assets like gold.
“This $0.1M to $0.2M range is a hard time for those with weak conviction to HODL Bitcoin. They’re uncertain because the “cycle” didn’t happen like before, and also because other assets like gold are rallying.”
Mow expressed optimism about Bitcoin's future, predicting it will "add a zero soon enough." However, he cautioned "paper hands" investors against being shaken out by temporary price fluctuations.
Long-Term Holders and ETF Dynamics
Glassnode analyst Chris Beamish observed that long-term Bitcoin holders continue to sell their positions, with a significant portion being acquired by institutional investors. Digital asset treasuries (DATs) and exchange-traded funds (ETFs) have absorbed a substantial amount of this supply. Beamish indicated that Bitcoin's upward momentum might remain constrained until this cohort of sellers significantly reduces their activity.
In parallel, Bitcoin ETFs have been impacted by geopolitical developments, specifically renewed tariff threats by President Donald Trump against China. On Monday, Bitcoin ETFs experienced net outflows totaling $40 million, marking the fourth consecutive day of selling, according to Cointelegraph reports.