Bitcoin’s retreat to $85,000 puts new whales in the red as STHs buy dips

Bitcoin’s retreat to $85,000 puts new whales in the red as STHs buy dips

Bitcoin’s retreat to $85,000 intensified unrealized losses for new large investors while highlighting a split between long-term holders distributing and short-term holders buying dips. In the past three months, the profit/loss margin for recent buyers fell toward -25%, a zone that has marked local bottoms multiple times since the 2023 bull run. Bitcoin’s retreat to $85,000 also coincided with an uptick in short-term accumulation, suggesting a late-cycle wealth transfer rather than a structural top.

Why Bitcoin’s retreat to $85,000 matters

Depth of drawdown for new entrants
Entities that accumulated >1,000 BTC within ~155 days are showing losses reminiscent of 2023 a stress point that sometimes precedes relief rallies.

Cohort divergence
Since July, LTHs have reduced their holdings by ~1.78m BTC (to ~13.68m), while STH supply rose by ~1.8m BTC (to ~6.28m). This rotation typically occurs late in cycles. Decrypt+1

Price context
BTC traded around the $86k area intraday on Dec. 16 after dipping near $85,800.

Market color and risk markers

“New whales going underwater don’t automatically imply forced selling. Capitulation risk rises if Bitcoin loses key cost-basis levels for recent buyers, especially around ETF or institutional entry zones,” said Shivam Thakral, CEO of BuyUcoin. A sharp macro shock would be the likeliest driver of defensive selling, he added.

Signals within Bitcoin’s retreat to $85,000

Short-term pain, potential bottoming
CryptoQuant’s STH metrics indicate drawdowns in the -12% to -37% band have historically aligned with bull-run reversal zones; 2025 readings approached -25%.

Flow to exchanges
Recent weeks saw STHs sending sizeable BTC to exchanges at losses—often late-stage shakeout behavior.

Context & Analysis

 The on-chain split LTHs distributing while STHs accumulate fits a late-cycle pattern seen in prior runs. That dynamic increases near-term fragility (supply in “weaker hands”) yet also sets the stage for rebounds once cost-basis thresholds are reclaimed and macro headwinds ease. Still, if ETF-era cost bases fail decisively, forced selling risk could rise.

Conclusion

BTC’s decline toward the $85k level has transferred unrealized losses mainly to investors who entered in 2025, while also attracting short-term traders looking to buy the dip. This price action suggests a rotation of risk rather than broad panic selling, as long-term holders remain relatively resilient.

Unless a major macroeconomic shock or a break below key cost-basis levels forces widespread capitulation, the current market structure does not point to a clear cycle top. Instead, it more closely resembles a late-cycle redistribution phase, where ownership shifts from weaker hands to more tactical or patient participants.

FAQs

Q : What triggered Bitcoin’s latest drop near $85,800?

A : Market-wide risk aversion and cohort rotation pushed newer buyers into losses, while short-term holders (STHs) absorbed incoming supply.

Q : Does Bitcoin’s retreat to $85,000 signal a market top?

A : On-chain data points to late-cycle redistribution rather than a structural top, though a break of key cost bases could still trigger capitulation.

Q : Are long-term holders selling?

A : Yes. Since July, long-term holder (LTH) supply has fallen by ~1.78 million BTC, while STH supply has increased by ~1.8 million BTC.

Q : Why is the -12% to -37% P/L band important for STHs?

A : Historically, this loss range has aligned with local bottoming zones during bull-market cycles.

Q : What could force selling now?

A : A major macro shock or a breakdown below recent-buyer or ETF cost bases.

Q : Where is BTC trading now?

A : Around the mid-$86k range intraday on Dec. 16, 2025 (Asia/Karachi).

Q : How do exchange inflows factor in?

A : Large loss-making STH inflows can signal stress, but they often appear in the later stages of market shakeouts.

Facts

• Event
  Price drop near $85,800 shifts losses to new entrants; LTH distribution vs STH accumulation

• Date/Time
  2025-12-16T15:00:00+05:00

• Entities
  Bitcoin (BTC); CryptoQuant (on-chain analytics); BuyUcoin (exchange); Shivam Thakral (CEO)

• Figures
  LTH -1.78m BTC (since July) to 13.68m; STH +1.8m BTC to 6.28m; STH P/L ~-25%; price near $85.8k–$86k.

• Quotes
  “New whales going underwater don’t automatically imply forced selling. Capitulation risk rises if Bitcoin loses key cost-basis levels for recent buyers, especially around ETF or institutional entry zones.” Shivam Thakral, BuyUcoin CEO

• Sources
  Decrypt (see below); CoinMarketCap price page