Bitcoin’s (BTC) on-chain data reveals structural concerns about the sustainability of the current rally, and defending the $111,000 zone is fundamental to avoid further downside.
As Glassnode reported on Sept. 25, the retreat from near $117,000 following the Federal Reserve’s rate decision reflects a textbook “buy the rumour, sell the news” pattern.
The current drawdown from Bitcoin’s all-time high of $124,000 to $111,012 represents just a 10.5% decline, modest compared to the cycle’s previous 28% correction or the 60% drops seen in earlier bull markets.
However, the report noted that this surface-level stability masks market exhaustion that warrants careful attention.
On-chain metrics paint a concerning picture of capital flow dynamics. This cycle has absorbed $678 billion in net inflows through realized cap growth, nearly 1.8 times larger than the previous cycle.
Long-term holders have distributed 3.4 million BTC in profits, already exceeding previous cycles and highlighting the magnitude of selling pressure from seasoned investors. The market structure reveals a fragile balance between institutional demand and the distribution of long-term holders.
US-traded Bitcoin spot ETF inflows, which previously absorbed heavy selling, collapsed from 2,600 BTC per day to nearly zero around the FOMC meeting.
Meanwhile, the long-term holder distribution surged to 122,000 BTC per month, creating an imbalance that set the stage for weakness.
Derivatives markets amplified the correction through forced liquidations and deleveraging. Futures open interest fell sharply from $44.8 billion to $42.7 billion as Bitcoin broke below $113,000, with dense liquidation clusters between $114,000 and $112,000 driving aggressive selling.
While this deleveraging reset cleared excess leverage, it also revealed the market’s vulnerability to liquidity-driven swings.
Options markets reflect heightened downside concerns, with put/call skew spiking from 1.5% to 17% following the correction.
Total options open interest near all-time highs creates a gamma overhang that amplifies volatility, particularly to the downside, where dealers are positioned short gamma.
As Bitcoin is now trading at $109,466, the $111,800 level represented the short-term holder cost basis and served as temporary support during recent selling.
This technical foundation becomes crucial as the market navigates between institutional accumulation and long-term profit-taking by holders.
Bitcoin’s ability to maintain the threshold will determine whether this correction represents healthy consolidation or marks the beginning of a deeper cooling trend.
Without renewed institutional demand to offset continued long-term holder distribution, the risk of more significant price declines increases substantially.
Haha, Glassnode really paints a picture of Bitcoin holders as the Grinch, especially the long-term ones! $678 billion in inflows and theyre still handing out BTC like its candy. Seasoned investors indeed! 😂 The markets like a tightrope walker over the $111k chasm, with institutional demand trying not to look down while holders keep tossing profits below. Those put/call skew numbers are spiking so hard, it’s like everyone’s betting on a sale at the Bitcoin discount store. Whether this is just healthy consolidation or the start of a brutal cold spell remains to be seen, but one thing’s for sure: the market’s definitely feeling the chill – and maybe a little bit of FOMC-induced frostbite. 🥶💰
Haha, so Glassnode says profit-taking is *dominant* and Bitcoins at a textbook correction, but I bet the long-term holders are just *adorably* eager to offload their stacks. $678 billion in inflows and theyre still distributing like its Black Friday? Talk about selling pressure! The derivatives markets are clearing leverage like its a fire sale, and the options market is betting big on the downside – maybe the dealers got a little too greedy? $111,800 support looks like a short-term hold, but without institutional buyers to catch every drop, this consolidation might just turn into a really long nap before the next bull run wakes up. Keep watching that $111,000 zone, folks!