Cryptoquant: Long-term investors have cautiously taken profits, and temporary volatility does not equate to structural weakness

BlockBeats News, October 17th, a Cryptoquant analyst said that the market is facing an impact similar to 2021, but it currently has a different structure. In previous cycles, during the panic phase, exchanges' reserves increased, and liquidity influx into exchanges amplified selling pressure. Today, Bitcoin balances on exchanges are at the lowest level in a decade, indicating limited available supply for sale, making the market structure more tense. The amount of Bitcoin held by exchanges has decreased, suggesting that a sustained downtrend is unlikely to form.

The behavior of long-term holders is also different from before. In 2020 and 2021, the Long-Term Holder's SOPR (LTH-SOPR) remained far below 1 for months, indicating that investors feared selling at a loss. In this current downturn, this ratio remains close to neutral, showing cautious profit-taking rather than fear-driven selling. Long-term investors continue to hold amid volatility, strengthening market resilience. Looking back at past impacts, in March 2020, the collapse cleared leverage, with whales accumulating significantly, leading to a V-shaped rebound. In May 2021, influenced by Tesla and regulatory pressure, Bitcoin fell by 30%, with whales selling about 50,000 bitcoins, then repurchasing 34,000 at the bottom. In August 2023, a U.S. debt rating downgrade triggered a 15% pullback, SOPR briefly dropped, then swiftly rebounded. Each event cleared excessive leverage and entered a new accumulation phase. This downturn has made the market seem more mature. With decreasing exchange reserves and stable long-term holders, temporary fluctuations do not equate to structural weakness. Bitcoin is setting the foundation for the next uptrend cycle.