Bitcoin (BTC) faces the risk of decline following recent violations of key levels, according to on-chain analytics firm GlassNode. Additionally, other metrics show emotions showing signs of tension after the FOMC rally, suggesting that the market may be heading for a deeper correction.
However, many analysts believe that upcoming “Uptober” can prove bullish for BTC. The assets may find seasonal tails that can stabilize price action and trigger new optimism.
Why Bitcoin prices are falling even further
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In its latest analysis, GlassNode said Bitcoin showed signs of “fatigue” after the Fed rate cut last week, pushing the price to $117,000.
“Bitcoin has moved into the revision phase, reflecting the textbook “buying rumors and selling news,” writes GlassNode.
Furthermore, the underlying metrics suggest vulnerabilities. The company emphasized that at this stage long-term holders (LTHS) have made a huge profit, with around 3.4 million BTC earnings.
This is higher than the previous cycle. GlassNode added that such a large distribution by long-term holders has historically coincided with the top of the market.
“Unlike the single long wave of the previous cycle, we saw three different multi-month surges in this cycle. The realized profit/loss ratio indicates that profit acquisitions are moving beyond 90% of the coin, marking a cyclic peak.
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Meanwhile, a slowdown in fresh demand has exacerbated this pressure. ETF Netflows collapsed from 2,600 BTC per day to nearly zero.
“ETF inflows have been balanced LTH sales so far, but there is little margin of error. Around FOMC, the LTH distribution has skyrocketed to 122K BTC/month, while ETF Netflows (7D-SMA) collapsed to almost zero from 2.6K BTC/day.
Additionally, the spot market showed signs of stress as volume surged during post-FOMC sales. The futures market experienced sharp deleverage, with open interest declining billions of dollars.
The options market has also become defensive, with demand surges and distorted and significantly increasing, increasing the attention of traders. In this, GlassNode noted that the short-term holder cost basis is $111,800, a key level to maintain.
“As the spot and future are under stress, a short-term holder cost base of $111K is an important level of holding or putting deeper cooling at risk,” the company emphasized.
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Currently, Bitcoin is already below the cost base, so the chances of further declines are significantly increased. Analyst Quinten Francois suggested that the market could lean sideways rather than immediate bearish breakdowns, although the outlook isn’t particularly bullish in the short term.
“BTC was categorized as 111.8K support and uptrend support. We got closer every day at these important levels. We are in the trade zone and see which direction we are going.
Can uptober save on bitcoin? Historical data suggest strong benefits
Despite these headwinds, seasonal factors provide a bullish counterpoint. October was often referred to as “Up to Ber” in cryptocurrency circles, and was historically one of Bitcoin’s strongest months. Coinglass data revealed that BTC averaged 21.89% returns that month.
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Additionally, analyst DarkFost noted that in the past 16 years, BTC has only been closed four times in October.
“If you invested in BTC on October 1, you would have earned a maximum monthly return of up to 213% since 2009. Since 2020, a simple October 1 investment in BTC has earned 7.5% to 30.5% in one month alone.
This performance has boosted market hopes for potential gatherings next month.
As Bitcoin trades below its main support level, we will be testing the assets to meet their upstream promises or to continue to fix the issue over the coming weeks.
