Crypto Correction Driven by Long-Term Holder Rotation, Not Bearish Reversal

BitcoinEthereum

Bitcoin and Ethereum extended their weekly declines on Tuesday, with BTC trading near $92,000 and ETH around $3,000, reflecting a broader risk pullback across crypto markets.

Key Takeaways:

Bitcoin trades near $92K and Ethereum near $3K after a sharp weekly decline.
The sell-off is mainly driven by short-term holders panic selling and deleveraging.
Long-term investors and institutions are still buying, indicating redistribution rather than exit.

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.

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.

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Author

Alexander Zdravkov is a person who always looks for the logic behind things. He has more than 3 years of experience in the crypto space, where he skillfully identifies new trends in the world of digital currencies. Whether providing in-depth analysis or daily reports on all topics, his deep understanding and enthusiasm for what he does make him a valuable member of the team.