Bitcoin Falls 18%: Buy, Sell, or Wait? Here’s What the Data Actually Says

Bitcoin crashed below $100,000 this week for the first time since June 23, marking an 18% decline from its October 6 all-time high of $126,210. The psychological $100k level—once celebrated as a breakthrough—now serves as the market’s battleground, with $103 billion in 24-hour trading volume reflecting intense uncertainty. For investors staring at red portfolios, the question isn’t academic: Is this a generational buying opportunity, a signal to cut losses, or a reason to wait for better clarity? The answer depends entirely on which data points you prioritize.

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The Bull Case: Why Smart Money Is Accumulating

Three critical indicators suggest this correction mirrors mid-cycle shakeouts rather than bear market capitulation.

First, 71% of Bitcoin’s supply remains in profit despite the 18% drawdown, according to Glassnode data. This sits comfortably within the 70-90% range typical of healthy bull market corrections. True bear markets don’t begin until this metric drops below 60%. The Relative Unrealized Loss at just 3.1% confirms this is mild pain, not the 15-20% levels seen during genuine capitulation events.

Second, small holders are buying aggressively while whales distribute. Wallets holding under 1,000 BTC show accumulation scores near 1.0—the highest conviction level—even as whales (10,000+ BTC) maintain three months of sustained selling. This divergence mirrors June 2024, when retail accumulation at perceived “local tops” preceded Bitcoin’s rally to new highs. While contrarian, history shows retail investors are often early but ultimately correct at major bottoms.

Third, institutional infrastructure has fundamentally changed the game. U.S. spot Bitcoin ETFs hold over $100 billion in assets, with BlackRock’s IBIT managing nearly 800,000 BTC. When previous corrections lacked this institutional backstop, cascading liquidations drove 40-50% drawdowns. Today’s 18% decline—despite $1.15 billion in long liquidations—suggests demand absorption that didn’t exist in prior cycles.

The technical setup reinforces this view. Bitcoin sits precisely on its 50-week exponential moving average at $101,000, a level that has marked major bottoms in every bull cycle since 2017. November historically delivers 42% average gains, and with the Federal Reserve cutting rates, macro conditions favor risk assets.

Buy Signal: Accumulate between $100k-$103k with stop-loss at $98k. Add aggressively if price reaches $94k-$96k (6-12 month holder cost basis).

The Bear Case: Why This Could Get Worse Before It Gets Better

The bearish argument carries weight that shouldn’t be dismissed.

Long-term holders—Bitcoin’s traditional “strong hands”—are distributing into weakness rather than strength, a rare and concerning behavioral shift. Since July, this cohort has shed 300,000 BTC even as prices fell, indicating fatigue among the most convicted investors. When combined with whale distribution (wallets above 10,000 BTC showing accumulation scores near 0), it suggests the largest players anticipate further downside.

The technical damage is undeniable. Bitcoin broke below its 200-day exponential moving average at $104,288 for the first time in months—a signal that has preceded extended corrections in 73% of historical occurrences. Short-term holder cost basis sits at $107,000-$110,000, creating a ceiling of overhead supply from investors desperate to exit at breakeven. Every rally toward these levels will face intense selling pressure.

ETF flows tell a bearish story despite the infrastructure narrative. Recent data shows $186 million in daily outflows, with BlackRock’s IBIT leading redemptions. If institutions are accumulating, why are ETF assets declining? Retail participation has collapsed, with futures funding rates at six-month lows and options traders positioning defensively with elevated put premiums.

Compass Point analyst Ed Engel warns that the comparison to 2018 is apt: October that year also broke seasonal patterns, and November delivered a brutal 37% collapse. With Long-term Holders still selling and Short-term Holders underwater, further capitulation toward $90,000-$94,000 carries 40% probability.

Sell Signal: Reduce exposure by 30-50% above $106k. Full exit if Bitcoin closes below $99k with volume confirmation.

The Wait Strategy: Let the Market Show Its Hand

For risk-averse investors, the smartest move may be patience until one of three scenarios plays out.

Scenario 1 – Bullish Confirmation (35% probability): Bitcoin reclaims $107,000 with strong volume and holds above 200-day EMA for three consecutive daily closes. This invalidates the bearish technical setup and targets $115,000-$120,000 within 4-6 weeks. Action: Enter long positions with 3-5% portfolio allocation.

Scenario 2 – Bearish Breakdown (40% probability): Price loses $100,000 support decisively, triggering cascade toward $94,000-$96,000 where 6-12 month holder cost basis provides real support. This 20% additional drawdown would mark a -33% peak-to-trough correction, consistent with mid-cycle resets. Action: Wait for capitulation, then scale in at $94k-$96k levels.

Scenario 3 – Extended Range (25% probability): Bitcoin consolidates between $100,000-$107,000 for 3-6 weeks, rebuilding support structure while digesting overhead supply. This “boring” outcome frustrates both bulls and bears but ultimately resolves bullish if institutional accumulation continues. Action: Dollar-cost average weekly until breakout direction clarifies.

The data points to watch: sustained moves above $107k (bullish) or below $99k (bearish) with volume confirming the direction. Until then, the risk/reward doesn’t favor aggressive positioning either way.

Wait Signal: Sit in cash/stablecoins until $107k reclaim or $94k capitulation. Don’t chase this chop.

The Bottom Line

Bitcoin’s 18% correction from $126,000 to $103,000 sits at a critical decision point. Bulls see mid-cycle shakeout supported by strong fundamentals and institutional infrastructure. Bears identify weakening momentum, distribution from strong hands, and overhead supply that could drive prices to $90,000. The data supports both narratives, making patient observation the highest-probability strategy for most investors.

What’s clear: $100,000 defines this battle. Sustained defense here with reclaiming $107,000 confirms bullish structure. Failure and a close below $99,000 opens the door to deeper correction. For now, let price action provide the answer the data cannot.