Bitcoin Pullback: New Whales Face 2023-Level Losses

Bitcoin dip into the mid-$80,000s exposes new entrants to deep unrealized losses

Bitcoin’s retreat to roughly $85,800 in mid-December 2025 has placed recent large buyers into unrealized losses not seen since the 2023 cycle. On-chain metrics show a clear redistribution of supply between long-term holders and more recent, short-term cohorts — a dynamic that has heightened near-term price fragility even as institutional demand and ETF flows continue to shape market structure.

Key data points

• Recent buyers (those accumulating over the prior ~155 days) are sitting with an average profit/loss margin near -25%.
• Long-term holders have reduced their supply by approximately 1.78 million BTC since July 2025, dropping more BTC into circulation.
• Short-term holders have increased supply by roughly 1.8 million BTC, bringing short-term held supply to about 6.28 million BTC.
• Thirty-day net position changes indicate a shift: short-term holder positions are up by an estimated +768,000 BTC while long-term holders show net reductions near -755,000 BTC.

These on-chain shifts underscore a transition in ownership that is typical in late-stage bull markets: profit taking by long-term holders and redistribution to newer entrants or shorter-term traders.

What the losses mean for market dynamics

An average unrealized loss near -25% for recent buyers is noteworthy because historically similar drawdowns — often observed in a roughly -12% to -37% range — have coincided with major local market bottoms during previous bull cycles. This does not, by itself, prove a structural market top; rather, it signals heightened sensitivity to further downside triggers.

When new large addresses or “new whales” move underwater following concentrated purchases, the market faces two linked risks:

• Psychological and behavioral pressure: investors who bought at elevated levels may be more inclined to trim holdings if losses deepen or if macro conditions deteriorate.
• Technical fragility: certain cost-basis levels become focal points for stop orders and margin liquidations, which can accelerate price moves if breached.

Rotation versus capitulation

Not all redistribution implies forced selling. The observed change in supply ownership appears consistent with a capital-rotation process: long-term holders realizing gains and reallocating capital, with short-term participants and institutional channels absorbing much of that supply.

This pattern — sometimes described as a late-cycle wealth transfer — typically produces a period of consolidation. That period can be fragile and punctuated by volatility, but it can also set the base for subsequent price appreciation if demand resumes.

Derivatives and liquidity: why the recent rally lacked conviction

Derivative market readings from the autumn of 2025 help explain why the recent recovery looked structurally weak. After a leverage unwind situation in early October, the market experienced a steep degree of deleveraging through November, with BTC losing approximately 27% during that correction phase.

Key derivative signals during that period included:

• Rising open interest while traded volume and cumulative delta fell — a setup where new short positions contributed to downward pressure.
• A subsequent short-covering and low-liquidity rally that lacked sustained fresh long demand across futures and options.

When rallies occur on thin demand, they are more vulnerable to reversals if macro sentiment or risk appetite shifts. That helps explain why the mid-December downturn punished recent buyers more heavily.

2025 macro backdrop and institutional participation

The macroeconomic and policy environment in 2025 matters for how these on-chain flows will influence price action going forward. Several structural themes are relevant:

• Central bank policy: The trajectory of interest rates and liquidity operations continues to shape risk asset allocations. Even modest policy shifts or new reserve operations can alter flows into BTC.
• Institutional adoption: Broader institutional access (including ETFs and corporate treasury allocations) has expanded the buyer base since earlier cycles, making supply absorption more diverse than in prior years.
• Regulatory clarity: Ongoing developments in regulatory frameworks globally affect custody, trading windows and institutional onboarding timelines.

These factors together mean that while coin rotation between cohorts increases short-term volatility, the deeper market structure now features additional demand channels that can absorb distribution periods more effectively than in previous cycles.

What to watch next: indicators and thresholds

Traders and investors should monitor a combination of on-chain, derivatives and macro indicators to track market health and anticipate potential inflection points:

• Cost-basis concentrations: observe price levels where recent cohorts purchased, especially institutional entry zones, as breaches could trigger stop-loss cascades.
• Supply held by long-term vs. short-term holders: continued declines in long-term supply coupled with further short-term increases suggest extended redistribution.
• Funding rates and open interest: sustained negative funding and rising open interest can indicate dominant short positioning; a flip to positive funding with rising OI on rallies signals stronger demand.
• Options skew and put-call ratios: increased demand for downside protection indicates market caution and can suppress upside momentum.
• Macro catalysts: central bank announcements, unexpected macro shocks, or changes in liquidity operations can rapidly shift the risk environment.

Possible scenarios

Market participants can broadly prepare for three plausible near-term scenarios:

• Base-building and consolidation: distribution finishes and short-term holders either hold through consolidation or are gradually absorbed by renewed institutional demand; volatility moderates and a higher base forms.
• Further downside and capitulation: a macro shock or a breach of key cost-basis levels prompts accelerated selling from underwater recent buyers, producing sharp price declines and washouts.
• Re-acceleration higher on strong demand: catalysts such as renewed ETF inflows, increased corporate allocations, or accommodative macro news restore buying conviction and push prices higher.

Implications for risk management

Investors should align position sizing and risk management with the higher short-term fragility implied by the current cohort rotation. Practical considerations include:

• Use staggered entries: dollar-cost averaging can mitigate timing risk while recent buyers remain underwater.
• Set clear stop and risk budgets: define acceptable drawdown levels given current volatility.
• Monitor liquidity: on-chain and derivatives liquidity metrics can warn of thin markets where slippage and impact costs rise.
• Keep an eye on institutional flows: ETF and custody inflows or outflows often signal whether supply is being absorbed at scale.

Longer-term perspective

While the near-term picture shows redistribution and elevated volatility, the broader evolution of market participants suggests a more mature ecosystem in 2025 compared with earlier cycles. Greater institutional access, varied custody options, and deeper derivatives markets mean that distribution phases can be managed across more channels.

That said, maturity does not eliminate cycles. Rotation between cohorts is a characteristic feature of late-cycle markets. Market participants should prepare for consolidation phases that, when resolved, can provide clearer entry points for the next leg of the trend.

Where to learn more

For traders and investors seeking real-time market data and execution options, platforms offering comprehensive spot, derivatives and research tools can help navigate these distribution phases and monitor the metrics outlined above. Explore market services and resources at MEXC for trading, custody and analytics to support informed decision-making.

In 2025, the balance between distribution by long-term holders and accumulation by short-term participants will be one of the defining themes for Bitcoin price action. Tracking on-chain holder cohorts, derivative positioning and macro catalysts will be essential to interpret whether current losses mark a temporary drawdown, the start of a deeper correction, or the groundwork for a durable consolidation before further gains.

Disclaimer: This post is a compilation of publicly available information.
MEXC does not verify or guarantee the accuracy of third-party content.
Readers should conduct their own research before making any investment or participation decisions.