New investors in the leading cryptocurrency are selling coins at a loss, leading to what analyst Crazzyblockk describes as a “healthy market shakeout.”
Weak Hands Fold: New Bitcoin Investors Capitulate, Fueling a Healthy Market Shakeout
“The market is purging its weakest hands, transferring their BTC to holders with a lower cost basis and higher conviction.” – By @Crazzyblockk pic.twitter.com/l5jZVpOOGJ
— CryptoQuant.com (@cryptoquant_com) August 26, 2025
According to him, experienced holders are absorbing this supply.
Investors who have held bitcoin for less than a month are realizing an average unrealized loss of 3.5%. In response, they are selling assets. On-chain data confirms a decrease in supply from this cohort of traders. Crazzyblockk called this a classic capitulation driven by fear.
Meanwhile, short-term holders (STH) remain in profit, with a cumulative unrealized gain of 4.5%. Crazzyblockk explained that this is not a sign of panic. The reduction in overall STH supply is a direct consequence of the “tourists'” capitulation.
The analyst views this as a positive signal. The market is shedding “weak hands,” with bitcoins moving to more confident investors with a lower entry price. According to Crazzyblockk, such a shakeout creates a solid support base for future price growth.
Macroeconomic Risks
Gordon Johnson, head of GLJ Research, stated that the leading cryptocurrency is at risk of a 65% collapse.
This isn’t a question of ‘paper hands.’ The O/N RRP is now fully drained — something we haven’t seen since it surged in 2021. Thus, unless the Fed abruptly abandons QT & reverts to QE, US liquidity is going to contract for the 1st time since 2022. And the last time that happened,… https://t.co/L2kGsyJy2j pic.twitter.com/fnzX1tENIC
— Gordon Johnson (@GordonJohnson19) August 25, 2025
In his view, this could occur due to a reduction in dollar liquidity in the US financial system.
“This isn’t about ‘paper hands,’” Johnson emphasized.
The expert highlighted the complete depletion of the reverse repo o/n mechanism. The indicator has not dropped to zero since 2021.
According to Johnson, this event signals an impending liquidity contraction for the first time since 2022. Such a scenario can only be avoided if the US Federal Reserve abandons its policy of quantitative tightening and returns to easing.
Data Indicates Vulnerability
Analysts at Glassnode confirm the market’s weakening. According to their report, the transition from euphoria to “fragility” is expressed as follows:
- spot market — buyer confidence is weak, trading volumes remain low;
- derivatives — leverage has decreased, but traders in the options market have become more active in hedging against price declines;
- bitcoin ETFs — spot funds in the US faced a net capital outflow of $1 billion, with demand from traditional finance cooling;
- on-chain activity — the number of active addresses and transaction fees have decreased, indicating weak organic demand.
Signal from Retail Investors
Spot bitcoin ETFs have recorded outflows for six consecutive trading days, noted analysts at Santiment.
📉 Bitcoin ETF’s are on their longest outflow streak (6 market days) since the tariff fears peaked back in early April. Increasingly, there are cases to be made that these inflows & outflows are retail-driven, and not just institutional-driven like they were early on.
😱 Large… pic.twitter.com/bM6t19gfgM
— Santiment (@santimentfeed) August 26, 2025
According to them, there is growing evidence that retail traders are becoming the driving force behind capital flows. Previously, these flows were mainly provided by institutional players.
Analysts explained that retail investors tend to make emotional decisions. They withdraw funds from ETFs when they believe the market has peaked. Such actions can temporarily pressure the price of bitcoin.
However, such behavior often indicates the formation of a local bottom, as was the case in April, concluded Santiment.
From August 16 to 22, investment products based on digital assets lost $1.43 billion, marking the largest outflow since March.