Cryptoquant: Long-term investors are cautiously taking profits, and temporary fluctuations do not equate to structural weaknesses.

On October 17, analysts from Cryptoquant stated that the market is facing shocks similar to those in 2021, but the current structure is different. In previous cycles, during panic phases, the reserves of trading platforms increased, leading to an inflow of liquidity that amplified selling pressure. Currently, the Bitcoin balance on trading platforms is at its lowest level in a decade, indicating limited supply available for sale and a tighter market structure. The amount of Bitcoin held by trading platforms has decreased, making a sustained downtrend less likely. The behavior of long-term holders also differs from the past. In 2020 and 2021, the long-term holder SOPR (LTH-SOPR) was significantly below 1 for months, indicating that investors were fearful of losses. However, during this drop, the ratio has remained around neutral, reflecting cautious profit-taking rather than fear-driven dumping. Long-term investors continue to hold through fluctuations, enhancing market resilience. Looking back at past shocks, the collapse in March 2020 cleared leverage, and large investors accumulated significantly, leading to a V-shaped Rebound. In May 2021, impacted by TSL and regulatory pressure, Bitcoin fell by 30%, with large investors selling about 50,000 Bitcoins, later repurchasing 34,000 at the bottom. In August 2023, a downgrade in the US debt rating triggered a 15% pullback, with SOPR briefly declining and then quickly rebounding. Each of these events cleared excessive leverage and entered a new round of accumulation. The current downturn appears more mature. With trading platform reserves decreasing and long-term holders stabilizing, temporary fluctuations do not equate to structural weakness, and Bitcoin is laying the groundwork for the next rising cycle.