Binance data: Rate cut sell-off came from short-term traders

Data from the Spend Output Age Bands (SOAB) confirmed that the recent panic selling came from hot money and not diamond hands.

When the US Federal Reserve cut interest rates on October 29, the price of Bitcoin (BTC) fell sharply, prompting traders to send more than 10,000 BTC to Binance. This raised questions about whether this was a ‘sell the news’ event or the start of a new crypto winter.

But a CryptoQuant analyst has now released new information showing that most of the selling was done by one group: traders who had only owned their Bitcoin for less than a day.

The real story in the data

Bitcoin’s price fell after the Fed announced it would cut interest rates by 0.25%, from about $112,000 to a weekly low of about $106,500 per CoinGecko. This reverberated throughout the crypto market, causing more than $1.1 billion in trading positions to be closed.

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

However, market technician CryptoOnchain shared crucial context coming from a specific on-chain metric known as Spent Output Age Bands (SOAB). This tool sorts Bitcoin transactions based on how long they had been sitting before being moved. His research showed that 10,009 BTC of the October 30 Binance inflow only came from units held for less than 24 hours.

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

His report went further and highlighted the clear divide with long-term investors, noting:

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

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

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A pattern of short-term panic

This behavior fits a pattern noted by another analyst, Amr Taha, who pointed out that short-term traders are active on Binance sold on October 30 for approximately $1 billion worth of Bitcoin. Their activity coincided with massive outflows from spot Bitcoin ETFs the day before, including large withdrawals from funds managed by BlackRock and Fidelity.

According to Taha, this combination of selling by exchange users and ETF investors has traditionally been a sign of a local market bottom driven by panic, rather than the start of a long-term downturn.

At the time of writing, the flagship cryptocurrency was down 0.9% in the past 24 hours, trading at around $109,725. The price also reflects a decline of around 1% for the week and 4% for the month, even as BTC continues to rise more than 52% over the past year.