Blockchain data shows that the latest bitcoin market correction, which sent the oldest cryptocurrency down by more than 35% from its peak price above $64,000, may have been driven by panic selling from investors who bought during the recent bull market.

“The bitcoin market is in a historically significant correction,” blockchain data analytics firm Glassnode wrote in a post on Monday. “There are strong signals that short-term holders are leading with panic selling.”

At press time, bitcoin (BTC) was changing hands at $42,860.11, down 9.65% in the past 24 hours, based on the CoinDesk 20. The steep price drop came after a series of tweets by Tesla CEO Elon Musk in which he initially failed to deny outright that his electric-car company has sold or could soon sell all of its more than $1 billion holdings of BTC. He later clarified that Tesla had not sold any of the holdings.

On Wednesday, Musk announced that Tesla would no longer accept bitcoin as a form of payment because of concerns about its impact on the environment. The price fell by nearly 13% that day, or more than $7,000, on the Coinbase exchange, according to TradingView.

In the post Monday, Glassnode, citing several key blockchain data metrics, said that the market correction has been led by new investors who are selling in a panic.

The "short-term holder SOPR," or STH-SOPR that filters for coins younger than 155 days, dropped well below the key threshold of 1, meaning that newer market entrants appear to have "panic-sold" and realized “significant” losses on their invesments, according to Glassnode.

SOPR measures the net profit/loss position of bitcoin outstanding. A reading below 1 implies that any bitcoin moved that day is on average selling at a loss. At the time of writing, while the SOPR for the long-term holders is also trending downward, the value is still above 4.

At the same time, the number of accumulation addresses of bitcoin continues to rise, as the count of non-zero balance addresses dropped by about 2.8% – indicating that long-term holders are buying on the latest price dip, according to the Glassnode post.

With bitcoin still at a much higher price than it was during the last bull market, bigger capital inflows are needed to drive a full price recovery, according to Glassnode’s report

On the other hand, the blockchain data also might imply that the current correction could be “a larger time-frame pullback in a bull cycle.” 

“Weak hands capitulate,” Glassnode said. “And stronger hands recommence their accumulation of cheaper coins.”