Rate Cut Liquidation Came From Short-Term Traders

Spent Production Age Bands (SOAB) data confirmed that the recent panic selling came from “hot money,” not the hands of diamonds.

When the US Federal Reserve cut interest rates on October 29, the price of Bitcoin (BTC) fell sharply, prompting traders to send over 10,000 BTC to Binance and raising questions about whether this was a “selling the news” event or the start of a new crypto winter.

But a CryptoQuant analyst has released new information showing that most of the sales were made by one group: traders who had only held their Bitcoin for less than a day.

The real story in the data

Bitcoin price fell after the Federal Reserve announced it would cut rates by 0.25%, falling from around $112,000 to a weekly low of around $106,500 per CoinGecko. This reverberated throughout the cryptocurrency market, causing more than $1.1 billion in trading positions to be closed.

Initial evidence pointed to a bearish turn, a sentiment made even more credible when data showed thousands of BTC flowed into Binance on October 30, something that typically happens before a sale.

However, market technician CryptoOnchain shared some crucial context coming from a specific on-chain metric known as Spent Output Age Bands (SOAB). This tool classifies Bitcoin transactions based on how long they were immobile before being moved. Your research presented that 10,009 BTC of Binance’s Oct. 30 influx came only from units that had been held for less than 24 hours.

“This is the signature of ‘hot money’: short-term traders and speculators who react instantly to news,” the expert said.

Their report went further to emphasize the clear divide among long-term investors, noting:

“In stark contrast, the inflow of long-term holders (coins older than 6 months) was negligible. The market’s ‘diamond hands’ remained firm.”

This divergence demonstrates that the selling pressure did not come from the foundational investor base that Bitcoin has built up over the years. Instead, it was driven entirely by the most reactive participants, those who buy and sell based on the hourly headlines.

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A short-term panic pattern

This behavior fits a pattern observed by another analyst, Amr Taha, who noted that short-term traders on Binance sold around $1 billion worth of Bitcoin on October 30th. Its activity coincided with huge outflows from spot Bitcoin ETFs the previous day, including large withdrawals from funds managed by BlackRock and Fidelity.

According to Taha, this combination of selling by exchange users and ETF investors has historically been a sign that the local market is forming out of panic, rather than the beginning of a prolonged recession.

At the time of writing, the flagship cryptocurrency was down 0.9% in the last 24 hours to trade at around $109,725. The price also reflects a drop of approximately 1% over the week and 4% over the month, even though BTC is still up more than 52% in the last year.