Small Traders Panic-Sell – And Analysts Say That’s Exactly How Bottoms Form

According to blockchain datasets, ownership is quietly transferring away from short-term speculators and toward longer-term investors, the type who historically drive the early stages of recoveries.

What stands out isn’t the size of the price drop, but who is selling and who is not.

Losses Hit Records — But Mostly for Short-Term Market Participants

Glassnode’s latest numbers show that short-term holders are realizing losses of roughly $427 million per day on a 7-day average — the steepest loss realization since late 2022. During the 2022 capitulation event, similar levels marked the point where “weak-hand” holders exited the market almost completely, leaving supply in the hands of more resilient wallets.

That pattern appears to be repeating. Whales and long-term holders are not the ones panic-selling — short-term and retail wallets are.

Retail Capitulation Is Now Visible on Chain

Santiment’s data adds to this picture. The sharpest selling stretch came not from large or professional traders, but from the smallest account groups across multiple networks. And unlike long-term investors, these holders typically panic-sell near cycle lows, not cycle tops.

Only after identifying the capitulation pattern did Santiment share the exact breakdown:

• Bitcoin wallets under 0.01 BTC trimmed their balances sharply in the past five days.
• Ethereum wallets below 0.1 ETH dropped close to 1% of their holdings over the past month.
• XRP wallets under 100 tokens have sold more than 1% of their assets since November began.

The numbers matter less than who is doing the selling. Historically, when retail holders exit at scale, the selling pressure tends to run out of fuel soon after.

Why This Matters More Than the Price Drop Itself

Prices do not bottom because everyone stops worrying — they bottom when there’s no one left who wants to sell at lower prices. The data now suggests that a large portion of short-term traders have already capitulated.

The market doesn’t need immediate bullish momentum for conditions to improve. It only needs the panic-driven supply to dry up. Once selling pressure fades, liquidity naturally shifts toward buyers with longer time horizons — and relief rallies frequently follow.

None of this guarantees a recovery tomorrow. But the profile of sellers looks more like an end-phase washout than the beginning of a larger structural decline.

The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.

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