Bitcoin's (BTC) fall from grace has sparked debate about what really caused the decline. Was it savvy long-term holders cashing out at the top, or something else entirely?

The Short Answer: Panic, Not Profit-Taking

According to CryptoQuant, the decline was overwhelmingly driven by short-term holder capitulation, not long-term investor selling. Here's what the data showed:

• Short-term holders repeatedly sold at a loss, with coins under three months old dominating spent volume during the steepest drops.
• Forced deleveraging and liquidations as these newer holders exited aggressively.
• Long-term holder selling did rise since September, but the behavior aligned with normal mid-cycle profit-taking, not the heavy distribution typical of major market tops.
• Realized Cap continued climbing, showing new inflows, just not enough to absorb the surge of short-term holder selling plus steady long-term holder distribution.

Overall, the move points to a bull-market correction, not a cycle-ending reversal.

The Day Retail Blinked

CryptoQuant highlighted a massive retail flush-out on November 14, when short-term holders owning under 1 million BTC collectively panic-sold 148,241 BTC at an average price of $96,853, well below their $102,000 to $107,000 cost basis.

This wasn't profit-taking. It was a large-scale loss event triggered when Bitcoin broke below the psychological $100,000 level, turning perceived support into a trap door. Many late-cycle buyers, facing their first meaningful drawdown, chose to capitulate rather than stomach deeper volatility.

Historically, such short-term holder capitulation marks the transfer of coins from weak hands to stronger ones, often forming the base structure for the next major leg higher.