The recent Bitcoin price swings have again tested investor sentiment, but on-chain data suggests the market may now be healthier than before.
For context, between Oct. 10 and 17, Bitcoin’s price tumbled from $116,000 to $103,530, its lowest level in four months. The sharp drop wiped out several supports, including the $110,000 zone, and led to widespread selling.
However, at press time, Bitcoin has bounced back to around $110,931. This represents an impressive 7% gain from the recent low. The move has given traders some optimism that the worst of the decline may be over. Meanwhile, analytics firm Glassnode believes this correction served an important purpose.
Glassnode Says Bitcoin Market is Healthier Now
In its latest Market Pulse report, the firm explained that the sharp selloff flushed out excess leverage and cleared weaker positions from the market. The fast fall from $116,000 to $103,000 forced traders to protect their portfolios and shift to safer positions, effectively resetting the market’s balance.
Despite the rebound, Glassnode noted that traders remain cautious. Momentum indicators such as the Relative Strength Index only recently bounced from oversold levels, showing that buying pressure is still limited.
Moreover, the cumulative volume delta remains negative, pointing to ongoing selling, while spot trading volumes dropped during the crash. Essentially, this suggests there may be weaker conviction among buyers.
Similar Trend in the Derivatives Market
Glassnode also observed similar caution in the derivatives market. Specifically, open interest, which hit a new peak of $80 billion in May, dropped sharply, and funding rates eased as traders reduced exposure.
Meanwhile, in the options market, the 25-delta skew spiked as more participants sought downside protection. On-chain data showed that short-term holders now control a growing share of Bitcoin’s supply, as speculative capital becomes more active.
Nonetheless, longer-term investors appear unfazed. According to Glassnode, while both the Net Unrealized Profit and Loss (NUPL) and the Realized Profit and Loss ratios turned negative, meaning many traders are holding unrealized losses.
In addition, the Realized Cap continues to climb. This trend indicates that new capital is still flowing into Bitcoin, likely from investors with stronger conviction and longer-term goals.
Overall, Glassnode noted that the recent drop effectively cleared the market of excess risk. Traders have bought protection, cut leverage, and cleaned up their positions. The bounce from the lows looks promising, but the firm cautioned that the market’s structure remains fragile and that confidence will take time to rebuild.
In a separate update on X, Glassnode said Bitcoin had reclaimed the 0.85 cost-basis band, turning a previous risk level into support. The firm noted that this area is crucial for determining the next move. If buyers hold this level, momentum could build; if they lose it, the price might retest lower ranges.
#Bitcoin has reclaimed the 0.85 cost-basis band, turning a key risk level back into support.
If buyers can hold this zone, momentum can rebuild from here, but lose it again, and the market likely revisits lower territory.
A pivotal area to watch. pic.twitter.com/rF2BIg85nT— glassnode (@glassnode) October 20, 2025
PlanB Does Not Expect a Large Bitcoin Crash Soon
Meanwhile, market analyst PlanB recently argued that those expecting Bitcoin to fall below $100,000 because of the four-year halving cycle are misunderstanding the pattern.
According to him, while the halving cycle has historically led to strong rallies, typically from six months before to eighteen months after each halving, three past cycles don’t provide enough data to confirm a strict pattern.
PlanB explained that his Stock-to-Flow (S2F) model doesn’t predict tops or bottoms but focuses on the average price level across a full halving cycle, assuming a broader phase shift in the market. He pointed out that this cycle hasn’t yet shown signs of such a transition, as the RSI hasn’t crossed above 80 and the realized price hasn’t diverged from the 200-week moving average.
He added that the next phase could play out in two ways: either a major rally is still ahead, or Bitcoin is entering a more stable phase led by institutional investors who rebalance portfolios within fixed exposure limits. In both cases, he sees a bullish outcome, as he argued that a true bear market can’t happen before a major upward breakout first occurs.
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