From January 10 to 15, in the East 8 Time Zone, a highly fragmented flow of funds appeared on the Bitcoin blockchain: on one side, whale and shark-level addresses significantly increased their holdings, collectively buying about 32,700 BTC in just a few days; on the other side, small holders net sold, and although the absolute amount was not large, there was a more noticeable contraction in their holding ratio. During the same time frame, Crypto VC BruceLLBlue publicly reviewed his investment performance over the past three years, admitting that after managing 9 funds and investing in over 55 projects, the overall accumulated loss had reached the level of "tens of millions of dollars." This contrast between "smart money" on-chain accumulating in the secondary market while hot money in the primary market is collectively trapped in collapsing project valuations provides a clear mirror for the current cycle. This article will sequentially outline the current state of fund flows, dissect the structural causes behind VC losses, and discuss from whom to whom the chips are flowing amidst the intertwining of valuation bubbles and market cycles, as well as what this turnover means for the next round of market trends.

On-Chain Signals of Whale Accumulation of 30,000 BTC

● Fund Increase and Decrease and Interval Significance: According to on-chain data aggregated by @wublock and @TechFlowDaily, from January 10 to 15, Bitcoin whale and shark-level addresses collectively increased their holdings by approximately 32,693 BTC, equivalent to about 0.24% of the circulating supply during that period. Within a time window of just about five days, this increase has already shown a significant structural change, indicating a willingness of large funds to actively increase their positions amidst price fluctuations and uncertain sentiment.
● Small Address Sell-Off Comparison: In stark contrast, small holders exhibited a net selling state during the same period. According to @FinanceNewsDaily's compilation, small addresses collectively net sold about 149 BTC, corresponding to a holding reduction of about 0.30%. Although the absolute number is far less than that of the whales, it reflects a more pronounced contraction within their own chip scale. This means that, on a micro-structural level, chips are slowly concentrating from the dispersed small addresses to the larger holders.
● Market Views and Interpretation Framework: On-chain analysis firm Santiment and domestic observer @MetaEraCN pointed out that the current typical pattern on the Bitcoin blockchain can be summarized as "whales buying, small addresses selling." In their interpretation, this structure is often seen as a medium to long-term bullish chip layout signal: large funds collect chips during volatility, while small holders, who are more prone to emotional fluctuations, choose to cash out or exit passively.
● Data Nature and Boundary Reminder: It is important to clarify that the aforementioned increase and sell-off data are based on the short-term snapshot from January 10 to 15, 2026, and there is currently no continuous sequence of longer time dimensions available for comparison, making it impossible to infer the sustainability of whale accumulation behavior over weeks or even months. Therefore, these indicators more reflect the direction of chip migration at the current stage rather than a verified long-term trend, and subsequent tracking should continue to combine new on-chain data.

The Narrative and Misinterpretation of Smart Money and Trend-Following Whales

In traditional crypto narratives, whale accumulation is often naturally linked to medium to long-term bullish signals, while the sell-off by small addresses is categorized as emotional, short-sighted, or forced selling, thus being classified as "trend-following" and "weak hands." This opposing narrative is continuously reinforced when significant differentiation appears in on-chain structures, making "follow the smart money" an intuitive strategy for many investors. However, from historical cycle experience, large holders' accumulation often occurs during periods of increased market volatility, rising macro uncertainty, or bearish sentiment, at which point prices are not necessarily at absolute lows, let alone always directly tied to the initiation of a new bull market. Santiment has proposed the view that "whales buying and retail selling is an ideal layout for a bull market," which has been taken by many market participants as a template for validating market reversals, but this statement itself remains a market hypothesis that has yet to be verified and has not reached the reliability of an empirical law. Logically, whale accumulation and subsequent price performance are more closely related to "correlation" rather than "causation"; large addresses may have stronger beliefs in long-term fundamentals or may simply be utilizing liquidity gaps for structural allocation. For ordinary investors, viewing whale movements as a structural clue helps understand the flow of chips from one hand to another, but it should not be simplified into a single market prediction tool, nor should it be isolated to draw conclusions about whether a bull market has begun.

VC's Tens of Millions of Dollars in Losses Over Three Years: Samples and Reflections

In contrast to the quiet accumulation of whales in the secondary market, Crypto VC BruceLLBlue's three-year investment review reveals the pressure funds have faced in the primary market from another dimension. He disclosed that over the past few years, he has managed 9 funds and invested in over 55 projects, which, in terms of both the number of funds and project coverage, is representative and can be seen as a typical microcosm of this round of primary market frenzy. After operating this portfolio for three years, he provided the overall result: a total paper loss of "tens of millions of dollars." Considering that the crypto market has experienced alternating bull and bear phases, with liquidity expanding and contracting during these three years, this outcome of "ending with significant losses after traversing a complete cycle" appears particularly striking to outsiders. BruceLLBlue emphasized in his review that the so-called "smart money" in the primary market does not inherently possess cyclical immunity; rather, without constraints on hedging and liquidity management, entering at high valuations is more likely to expose risks when liquidity recedes. He candidly stated that the primary market should emphasize hedging and liquidity management, with the core being the exit mechanism—if one cannot exit smoothly through the secondary market or mergers and acquisitions, then paper valuations can easily be compressed multiple times during a bear market. It is important to note that he did not disclose the precise profit and loss distribution or specific return rates for each project, and outsiders cannot reconstruct the detailed performance of individual projects based on this. This case is used in this article only for macro-level structural analysis, rather than for evaluating each item in his investment portfolio, and any further detailed inferences carry the risk of inaccuracy.

The Near Total Collapse of NFTs and the Amplifying Effect of High Rug Rates in GameFi

Among these 55+ projects, information from source B indicates that BruceLLBlue's investments in the NFT sector are almost entirely in a state of loss. This indicates that in this round of the cycle, narrative assets represented by NFTs exhibit significant fragility in terms of valuation and liquidity: during periods of heightened sentiment, they can rapidly inflate valuations based on IP, community, and hype logic, but once liquidity is withdrawn, lacking sustained cash flow and clear business models, they struggle to maintain prices in the secondary market, resulting in a near-zero price performance during bear markets. Meanwhile, in the GameFi sector, about 33% of projects have been identified as having engaged in rug behavior, meaning the project parties went missing, funds were misappropriated, or they severely violated original commitments. This proportion reflects the serious deficiencies in project quality control and moral hazard prevention in this sub-sector. For a VC portfolio covering 55+ projects, allocating a significant proportion of funds to high-risk, narrative-dependent sectors like NFTs and GameFi means enjoying the thrill of peak valuations at the end of a bull market, but also enduring more severe drawdowns during bear markets. The drastic adjustments in these single sectors have amplified losses at the portfolio level, making what initially seemed like diversified investments highly homogeneous in terms of risk factors. It is important to note that the above conclusions are based solely on a single VC's perspective and limited samples and cannot be simply extrapolated to the overall state of the NFT and GameFi industries. However, from a risk management perspective, this case is sufficient to remind the market: in the hottest sectors of the primary market, the elasticity of valuations and the fragility of liquidity often coexist, and excessively chasing trends can easily evolve into systemic drawdowns when cycles reverse.

The Deep Entrapment of Infrastructure Projects Amidst Collapsing Valuation Bubbles

More representative are those infrastructure projects that were once considered to have "higher safety margins." According to data from source B, many infrastructure projects in this round of the cycle have seen their valuations in the secondary market fall back to about 10% to 20% of their peak values, meaning that investors who entered at the highest levels are generally facing 80% to 90% deep drawdowns in market value. From the perspective of capital costs and exit difficulties, this means that VCs who entered at high levels have almost lost traditional exit windows: even if projects are still operational and product lines are not interrupted, the lack of new capital to take over and sufficient trading volume makes the original exit plans based on valuations of hundreds of millions or more difficult to realize. Combining BruceLLBlue's reflection on the "core of the primary market being the exit mechanism," it can be seen that many institutions in this round of frenzy generally overlooked the downward liquidity discount when pricing in the primary market—namely, that during liquidity contractions and reduced risk appetite, the extent of downward adjustments in valuations often exceeds the assumptions of normal models. At the same time, when we compare the gradual accumulation of on-chain whales during volatility at low levels with VCs being forced into long-term lock-ups after entering at high levels in the primary market, we find a clear difference in cycle pricing ability: the former adjusts positions more dynamically based on spot prices and medium to long-term expectations, while the latter often locks large amounts of capital in illiquid equity or tokens at the hottest narratives and highest valuations. Once the external market enters a deleveraging phase, the former has the flexibility to adjust and continue accumulating, while the latter can only passively observe amidst paper losses.

Chip Turnover and VC Casualties: Whose Hands Will the Next Round of Chips Be In?

Integrating the current on-chain data and VC loss cases, it can be seen that the second half of this cycle presents a rather ironic inverted pattern: whales are quietly taking over in the secondary market, while a significant portion of VCs is collectively trapped in the primary market. From the perspective of chip migration, small holders choose to sell during uncertain phases, handing over BTC to larger holders willing to endure volatility; meanwhile, institutional funds that entered project shares at high valuations in the primary market and lack exit channels are forced to remain locked in illiquid equities. For ordinary investors, this structural misalignment brings at least two insights: first, it is necessary to closely monitor whether chips continue to concentrate from small addresses to large holders, and whether this process occurs in tandem with price adjustments and amplified volatility; second, when participating in projects in the primary market or even semi-primary markets, one must maintain a higher sensitivity to the liquidity risks implied in valuations, being wary of taking on "the previous round's cards" at excessively high prices during bubble periods. It should also be reiterated that the boundary of this article: there is currently no proven causal chain between whale accumulation and the initiation of a bull market; relevant data can only be used for structural observation and does not constitute a direct judgment on market reversals; BruceLLBlue's loss case is merely a sample from a single VC and cannot represent the average level of the entire industry, serving only as a reference for risk and lessons learned. Moving forward, market participants need to focus on whether whale accumulation behavior can continue over the next few weeks or even months, whether the secondary valuations of infrastructure projects stabilize around the 10% to 20% range and gradually rebuild trading activity, and whether the primary market can reconstruct healthier valuation and exit mechanisms after experiencing large-scale drawdowns and exit obstacles. Chips are changing hands, and the initiative for the next round of market trends may quietly shift during this round of pain.

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