$678 billion in net inflows has been absorbed by this cycle through realized cap growth, an amount almost 1.8 times larger than the previous cycle.
Structural concerns regarding the current rally’s sustainability are revealed by Bitcoin’s on-chain data. Maintaining the $111,000 zone is considered vital to prevent further decline.
A textbook “buy the rumour, sell the news” pattern is reflected in the pullback from near $117,000 following the Federal Reserve’s rate decision, as Glassnode reported on Sept. 25.
A mere 10.5% decline is represented by the current drawdown from Bitcoin’s all-time high of $124,000 to $111,012. This is a modest drop compared to the cycle’s previous 28% correction or the 60% plunges seen in earlier bull markets.
However, the report noted that market exhaustion is masked by this surface-level stability, which requires close scrutiny.
On-chain metrics present a concerning view of capital flow dynamics. A net inflow of $678 billion has been absorbed by this cycle via realized cap growth, a figure almost 1.8 times larger than the previous cycle.
A total of 3.4 million BTC in profits has been distributed by long-term holders, a figure that already surpasses past cycles. This move underscores the significant selling pressure from seasoned investors, and the market structure reveals a fragile balance between institutional demand and distribution.
ETF Inflows Stall as Long-Term Holders Sell and Liquidations Deepen Bitcoin’s Drop
Inflows into US-traded Bitcoin spot ETFs, which had previously absorbed heavy selling, were reduced from 2,600 BTC daily to nearly zero around the FOMC meeting.
Meanwhile, the long-term holder distribution jumped to 122,000 BTC monthly, and an imbalance was created that set the stage for weakness.
The correction was amplified in derivatives markets through forced liquidations and deleveraging. Futures open interest plummeted from $44.8 billion to $42.7 billion as Bitcoin fell below $113,000, with dense liquidation clusters between $114,000 and $112,000 fueling aggressive selling.
While this deleveraging reset cleared excess leverage, the market’s vulnerability to liquidity-driven swings was also revealed by it.
Heightened downside concerns are reflected in options markets. The put/call skew spiked from 1.5% to 17% following the correction.
Total options open interest near all-time highs creates a gamma overhang. This overhang amplifies volatility, particularly to the downside, where dealers are placed in a short gamma position.
The $111,800 level was representative of the short-term holder cost basis and served as temporary support during recent selling, as Bitcoin now trades at $109,466.
This technical foundation becomes crucial as the market is navigated between institutional accumulation and long-term profit-taking by holders.
The nature of this correction—whether it is healthy consolidation or the start of a deeper cooling trend—will be determined by Bitcoin’s ability to hold the threshold.
The risk of more significant price declines is substantially increased without renewed institutional demand to offset continued long-term holder distribution.
