Bitcoin has dropped more than 13% in the past week, while Ethereum is down roughly 16% over the same period.
On-chain analytics firms say the current drawdown is being driven mainly by short-term holders exiting positions, not by long-term investors abandoning the market. At the same time, long-term holders remain active, creating a rotation effect that increases volatility without signaling a breakdown in the overall uptrend.
On-Chain Data Indicates Redistribution, Not Exit
Recent wallet activity points to continued participation from long-duration investors and newly entering institutional buyers. Coins are moving between types of long-term holders rather than leaving the ecosystem entirely.
This rotation began earlier in the year when long-standing Bitcoin holders started selling into strength. Unlike previous cycles, the selling has coincided with consistent inflows from ETFs, corporate treasuries, and traditional finance entities, preventing the kind of liquidity vacuum typically associated with macro market tops.
This dip is just long-term holders rotating among themselves. Old Bitcoiners are selling to tradfi players, who will also hold for the long run.
The reason I predicted the top early this year is that OG whales were dumping hard. But the market structure has changed. ETFs, MSTR,… https://t.co/eGTRqPivFT
— Ki Young Ju (@ki_young_ju) November 17, 2025
Current Pullback Consistent With a Mid-Cycle Correction
Analysts attribute Bitcoin’s decline from $126,000 to a combination of short-term holder capitulation and routine profit-taking by long-term investors. New buyers continued to enter during the downturn, but the inflows were not large enough to fully counter panic selling.
The pattern does not match historical cycle-top behavior, where both short-term and long-term holders exit simultaneously.
Institutional Demand Still Supporting the Market
Large buyers with long investment horizons — including treasury funds and corporations accumulating Bitcoin as part of reserve diversification — have continued adding during the decline. These entities typically do not reduce exposure in response to price dips, which provides support during periods of volatility.
Analysts say ongoing institutional inflows remain a key factor for market stability and future price recovery.
Outlook
The recent downturn appears driven by short-term selling pressure rather than a loss of confidence among long-term market participants. On-chain data shows redistribution within the market rather than an exit of capital. If institutional demand maintains its current pace, the pullback is likely to be viewed as a bull-market correction rather than a bearish reversal.