With Exchange Reserves Down 1.7%, CryptoQuant Sees a Bitcoin (BTC) October Bottom Forming

Cautious Optimism From CryptoQuant

The desk behind Monday's call is XWIN Research Japan, a CryptoQuant contributor whose day job is reading on-chain holder and exchange-flow data, and its conclusion is that the Bitcoin (BTC) price may have already printed its October low. The analysis, published as a CryptoQuant quicktake, describes current on-chain conditions as a state of “cautious optimism” and flags early signs of a potential bottom. The claim cuts against a rough start to the month: United States bond yields at 24-year highs, rising oil prices and cooling capital inflows into exchange-traded products had all dampened expectations that October would deliver its traditionally strong performance. Since the start of October, however, conditions have shifted in favor of crypto and risk assets. Expectations of further interest-rate hikes by the Federal Reserve into 2027 have cooled, raising the odds that product inflows improve, and markets expect greater political clarity once the United States Midterm Elections conclude. “Less political uncertainty after the vote could help investors reassess allocations,” the desk wrote, adding that “now, signs of a potential bottom are emerging.” Three gauges anchor the argument: coins held on exchanges, apparent demand, and the combined balances of crypto whales. Together, XWIN argues, they suggest the month's local low may already sit behind the market rather than ahead of it. The read is, in effect, a defense of the seasonal pattern traders call “Uptober,” and it departs from the defensive tone that dominated commentary while spot fell from $87,000 on Oct. 2 to near $80,000 on Oct. 8, a slide that left traders asking whether the historically strong month had failed outright. For a market that has absorbed mixed macroeconomic and geopolitical pressure all year, it is the first data-backed case that the correction, not the rally, may lay the base for the next advance.

Exchange Reserves Down 1.7% in Three Weeks

Exchange supply is the first leg of the case. On-chain data shows Bitcoin (BTC) balances on trading venues fell from 2.726 million on Sept. 20 to 2.68 million as of Tuesday, a decline of 1.7%, despite a modest increase over the past week. Coins leaving exchanges, when withdrawals are not panic-driven, typically read as accumulation, and the wider Bitcoin supply picture has leaned that way through 2026. The second leg is holder behavior: combined holdings of large-volume investors remain above 3 million BTC, and the cohort showed little urge to reduce exposure even through the drop from $87,000 to near $80,000, a drawdown that forced a straight choice between selling and a decision to HODL. The third leg is demand. Apparent demand, a measure comparing output from crypto mining with changes in dormant supply, has been negative throughout 2026 apart from one brief stretch of positive 30-day readings in the second half of August, and it has recovered to near-neutral levels as of this week. “These developments suggest conditions for a bottom are improving,” the quicktake states, while stressing that “confirmation requires sustained ETF inflows, stronger US spot buying and continued demand recovery.” It also carries a caveat for anyone expecting a straight line higher: “Uptober need not mean uninterrupted gains: a correction can build the foundation for the next advance.” The read lands on a market that had steadied earlier this week, holding near $83,500 as trading volume cooled after the early-month slide. Sentiment among research desks has been turning for some time: asset manager Bitwise said this week that third-quarter on-chain data pointed to “crypto spring,” while CryptoQuant CEO Ki Young Ju declared in late August that the bear market was “over” and a new bull market beginning.

Confirmation Waits on ETF Inflows

Our reading is that the setup is necessary but not yet sufficient. A 1.7% reserve draw over three weeks is shallow next to the accumulation phases that marked earlier cycle turns, and near-neutral demand can roll back over if spot selling resumes around the vote. By the desk's own checklist, the burden now sits on flows rather than onchain balances: sustained ETF inflows come first, and they are the same condition behind the return of spot ETF inflows into the $84,000 test earlier this month. Until US spot buying strengthens alongside demand recovery, the October bottom remains a thesis with improving, not confirmed, support. For level-by-level context, our Bitcoin technical analysis page tracks where those flows must land to settle the question.