Written by: Xiao Bing

Within a week, three types of players in the crypto world took a step back at the same time: Strategy sold 1,690 BTC at an average price below cost, all used to repurchase its own preferred shares that had fallen below par. Trump Media reported a quarterly loss of $238.1 million, of which $190.4 million was due to the impairment of crypto assets, and management announced a contraction of its crypto business. Grayscale withdrew its registration applications for three spot ETFs—ADA, DOT, and HBAR—within 190 seconds.

Individually, they are just three corporate news bites, but together, they convey the same message: crypto is experiencing a rapid tide-out.

However, in this industry, a tide-out is never the end; rather, it is the prologue to the next round. As Feng Ge said, this is a good thing.

In a week, the three types of players are retreating

The standard bearer has let go first.

Strategy has sold Bitcoin for two consecutive weeks, recently selling 1,690 coins at about $64,262, cashing out $108.6 million, all used for repurchasing STRC preferred shares. Its average cost is $75,385, and at the current price of about $63,900, the overall floating loss on 840,000 holdings is approximately 15%.

Speculators also directly admitted defeat.

In the summer of 2025, when BTC was approaching its historical high, Trump Media bought about 9,500 Bitcoins at an average price of approximately $108,519, with a total investment exceeding $1.1 billion. Within less than a year, the fair value of the holdings shrank to $557.1 million, with a gap close to $500 million. The revenue for the same quarter was only $1.7 million. A more intuitive signal is that management and Crypto.com canceled the plan for a joint listing of CRO inventory companies, and the CEO said during a conference call that they would "narrow down part of the expansion in crypto and online entertainment, refocusing on social media," changing crypto from a strategic expansion to a sideline that needs to stop losses.

Institutions are quietly resizing their operations.

Grayscale withdrew the registration of its Cardano, Hedera, and Polkadot spot ETFs on August 7 in 190 seconds, with the statement specifically noting "the products are not effective and no securities have been sold," meaning it was a voluntary withdrawal. The timing is also subtle: Cardano was just two days away from qualifying for listing, yet it withdrew at this time, giving way to others.

The crypto industry needs to clear out

Faced with a screen full of bad news, most people can easily conclude, "crypto is finished," which is indeed the case by traditional industry standards.

Traditional industries fear clearing because clearing means the disappearance of capacity and significant damage to vitality, with recovery relying on a slow grind over time. The crypto industry lacks this buffer; there is no central bank backing, no bankruptcy restructuring; all clearing relies on violent completion through price crashes and leverage explosions within a very short time. It’s intense, but thorough.

The crypto market fundamentally differs from traditional asset markets: it needs to experience severe clearing regularly to optimize its chip structure and create conditions for the next round of rises. The premise of every bull market is that the "heroes" of the previous round are sacrificed and completely washed out.

The bursting of the ICO bubble in 2018 cleared out thousands of air coins and the speculative funds behind them, leaving the infrastructure of Ethereum and DeFi.

The FTX collapse and Luna zeroing out in 2022 buried high-leverage borrowing and opaque centralized exchanges, forcing a wave of on-chain transparency and compliance, indirectly leading to the approval of the BTC spot ETF in 2024.

The round of clearing happening in 2026 has changed its targets.

The last two rounds washed out retail investors and project parties, but this time it is starting to wash out corporate buyers.

Strategy's loss in selling coins indicates one thing: even believers who never sell must face reality when capital structure is compromised. Trump Media, under Trump's name, seems imposing, but a lack of investment discipline in corporate allocation can lead to debt in a bear market.

Grayscale trimming its product line indicates that institutions' enthusiasm for altcoins is experiencing a selection process; tokens outside of BTC and ETH need more than just an ETF application to gain recognition from traditional finance.

These clearings may sound painful, but they are necessary for the long-term health of the industry.

This industry's supply is coded into its DNA, while the demand side relies entirely on incremental funds, which only recognize one thing: whether the chips are clean. If floating losses and leveraged positions are not cleared, why would new money come in to take over? This is why crypto needs a proper clearing more than any other asset; only with a thorough clearing can the next round of money come in.

A thorough clearing is essential for the bull market to come

The signals of this round of clearing are subtler and more complex than before.

When mNAV falls below 1, it means the "increased issuance of stocks to buy coins, driving up stock prices, then reissuing" perpetual motion machine has stopped; the market is no longer paying for narratives but only taking gold and silver seriously. Even Strategy has started selling coins to repurchase discounted preferred shares, stacking its dollar reserves to $4.65 billion; the logic of capital allocation has returned: rather than blindly piling up coins, it's better to clean the balance sheet first. A market that begins to calculate cash flow is far healthier than one that only chants "hold forever." Grayscale would rather give up its imminent Cardano qualification than withdraw, which acknowledges that the marginal altcoin story is over, the bubble has been squeezed to the edge, and core assets remain.

More crucial is the flow of chips. The leveraged positions stuck at high levels, treasury relying on premiums to survive, and speculators who want to run after riding a wave of concepts – these "weak hands," as long as they still hold chips, will face a selling pressure from unfreezing with every price rebound. Today, Strategy's floating losses, Trump Media's forced selling, and the lack of interest in altcoin ETFs are essentially the migration of chips from weak hands to strong hands. This process is painful but necessary.

The tide washes away the foam and weak hands. What remains is a cleaner chip structure, more pragmatic institutional participants, and stricter product standards.

In the last cycle, the crypto industry built a spot ETF on the ruins of FTX. In this cycle, what will it build on the primary lessons of corporate hoarding?

The answer is still on the way and is worth anticipating.