The Breakdown - Bitcoin’s September Shakeout: $1.7B in Liquidations Sets Stage for Q4

Episode Date: September 24, 2025

Bitcoin’s September rally finally stumbled, with a 3.5% drop triggering $1.7B in long liquidations—the biggest of the year. While traders were caught offside, on-chain data shows holders aren’t selling, ETF flows remain mixed, and big treasury buys continue. NLW breaks down why this reset matters, how leverage is shaping the market, and what it means as we head into Q4. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the Big Picture Power Shifts remaking our world. What's going on, guys? It is Tuesday, September 23rd, and today we're talking about September doing September things. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Well, friends, the week is off to a rough start with Monday seeing a major drawdown in Bitcoin. After trading comfortably above $15,000 all weekend, Bitcoin dropped in two big moves on Sunday night. After beginning the day at $112,500 on Monday, a choppy day of trading saw a low of 111,500.

All told, this was a drawdown of around 3.5%. And we're still talking about Bitcoin trading well above $100K, but the move was still enough to catch some traders offside. Zhao Wedson commented, Bitcoin is already showing signs of cycle exhaustion and very few are seeing it. Well, Panda posted, most of you are not ready for this conversation. The NASDAQ is outperforming Bitcoin since 2021. Bitcoin has three months left to take off where there's no point holding through the volatility for these returns. But that's not a popular opinion. What is popular is Godzilla candle soon. Many noted that Bitcoin is also looking like a pretty underwhelming trade compared to gold this year.

While the move wasn't that large, it drove the biggest long liquidation so far this year at $1.7 billion. At this stage in the cycle, it feels as though essentially all of the volume is coming in the form of leveraged bets rather than spot buying. Onchain analyst checkmatey posted a chart commenting, for a matter of perspective, this is the current unrealized loss profile of Bitcoin derived from on-chain data. An unrealized loss means a coin was acquired at a price above 112k, and were measuring the negative delta between the cost basis and spot price. Squinting to see it. Another noteworthy component of this drawdown was the complete lack of volatility heading into the event. Jeff Park of ProCap Bitcoin posted,

the last time Bitcoin's 90-day realized volatility was this low was the end of 2016. And everyone remembers 2017. Generally, there's a sense that this was a healthy reset. Michael Vandapop tweeted a classic Monday morning liquidity sweep on the markets. It was slightly overdue. Excitement through the roof. And then the all coins and Bitcoin price is getting flushed, so over-leverage positions are taken out of the markets. These dips are the ones that you should be interested in to be accumulating your positions. Ash Crypto wrote, this is the biggest liquidation of the year, with over 95% coming from long positions. Why is an event like this important?

The market is overheating. Over-leverage longs need to get flush to reset the market. Now, the market is setting the stage for the next major move in Q4. For many, the September was going altogether too well, so it was high time for a bit of a correction. On Friday show, we talked about how this was the best September on record at a positive 8% move. Scott Melker commented that we could be celebrating a little early and he couldn't have been more correct. Bitcoin is still up 4.5% for the month, which is still the third best September ever. For a lot of people, the month, though, is no longer about taking risk. It's about waiting until

October, which is historically one of the best months for Bitcoin. All told, this wasn't the most painful drawdown you could imagine, but resetting the leverage in the system is still meaningful. Bitcoin is less than 9% off of all-time highs, so in a historical context, it's a long way from the brutal 30% drawdowns that were common during the last bull run. Broadly, though, the vibes are a little off. Rachel Lucas, a crypto analyst at Bitcoin Market said, The fireworks from earlier this year have fizzled. Investors are cautious, long-term holders aren't panicking, but short-term traders are restless. On-chain data shows holders aren't selling, so sentiment is more nervous optimism than outright fear. Now, if you're looking for an indication

of where we go next, there are a few meaningful tweets from traders who have seen a cycle or two. Firstly, Binance founder, CZ is back on crypto-Twitter and offering daily takes on the market after being largely absent for the past few years. He commented on Monday, dips are important for establishing support levels, which are like foundations of a house. GCR has also returned posting behind a private account. If you've been sidelined, believe this is a good opportunity to scale into high conviction tokens. If you're fully invested, just survive, hold your spot positions and do not capitulate.

Someone once said, Liquidations are a forced transfer of wealth from traders who need leverage to wealthy spot buyers. I was enjoying retirement from social media, but don't want to see my brothers get shaken out when the future is still so bright. And perhaps the ultimate in market-moving tweets we have Jim Kramer posting, I would like to see a pause in the endless rally of speculation, gold, crypto, and profitless companies. Maybe Jim will get what he wants for once and the froth will die down. But for now,

gold and AI stocks are plowing ahead, and there is a lot of attention on where Bitcoin will head next. Now, stepping back from the over-leverage traders, there is still a pretty bullish story playing out on longer timeframes. Last week was another big one for crypto-etfs, registering 1.9 billion in total global inflows. The last two weeks have been positive with the previous week coming in at a touch above $3 billion. James Butterfield, the head of research at coin shares, commented on the market activity around the Fed cut, writing, although investors initially reacted cautiously to the so-called hawkish cut, inflows resumed later in the week, with 746 million entering on Thursday and Friday,

as markets began to digest the implications for digital assets. Now, this is the first time since July we've had two strong weeks of inflows in a row. Monday was a big reversal, though, with the funds registering 363 million in outflows, which was the largest outflow since mid-July. While it's difficult to get a strong read on sentiment through ETF flows alone, the Bitcoin Fear and Greed Index only barely dipped into fear over the past few days. Taking everything together, you get the sense that market participants want to be accumulating Bitcoin. They're just scared that the four-year cycle is coming to an end and they don't want to

sit through a major drawdown. Now, the other big market participant at the moment is Bitcoin Treasury companies, and they're already having a big start to the week. Metaplanet registered the largest buy in the history of the company, adding 623 million worth of Bitcoin. Strive Capital made an interesting headline on Monday, acquiring similar scientific in an all-stock deal. Strive is one-time presidential candidate Vivek Ramoswami's private equity-turned Bitcoin Treasury company. Many have suggested that we'll start to see M&A among Bitcoin

Treasury companies once the premium starts to disappear. This isn't the kind of deeply distressed deal that some were looking for, with strike paying an implied 210% premium on Semler's current market value. Semler will bring around 5,000 Bitcoin worth around 550 million into the deal, while Strive disclosed their first big Bitcoin buy of 5,900 BTC or around 660 million worth. analysts were frankly a little confused by the whole thing. Tyler Roe of Treasury Orange commented, This one is difficult to analyze because of the complicated cell pressure from the pipe transaction that we've been covering at Treasury Orange. While this should be alpha on top of the Bitcoin strategy for Strive, we can't ignore the implicit pent-up supply of shares, long-term bullish,

short-term cloudy. An account called Bitcoin Asset Research argued that the name of the game is Engage M&A to increase creditworthiness of a post-merger entity. He argued that adding Settler's revenue to the bottom line would make it easier to tap debt market. markets. Now, similar only has revenues of around 40 million, though, so it's questionable how much that will actually help in practice. CEO Matt Cole addressed the questions, tweeting, Strive's merger announcement is accretive in Bitcoin per share, meeting our short-term goal, and we believe the combined power of the entities will give the combined company more ability to access the capital markets in a way that will drive increased Bitcoin per share and accretion

in a way neither could do on their own. Much more to come from all the hard work the team did to get to definitive docs and a merger only one week after flipping public. I believe this might be the quickest execution of this type of deal in the history of U.S. capital markets. Over on the regulatory side, the White House is still optimistic about getting market structure across the line this year. Patrick Witt, the executive director of the White House Council of Advisors on Digital Assets, said he is working with members of both the Senate and the House. He said, we're unblocking what we can, we're serving as a referee where there's kind of an impasse, weighing in where necessary, we're respecting the process, we're optimistic that we're

going to get it done before the end of the year. Witt is currently attending Korea blockchain week and made the case for the U.S. to continue to be a welcoming place for crypto startups. He said, the U.S. is open for business. We are moving at full speed ahead on crypto. We're trying to bring as many of these companies back onshore that were driven offshore by previous moves that are preceding regime put in place. We presented an open-door policy, adding that the Crypto Council is just, quote, one phone call away for any startups that need to interface with the administration. Lastly today, nine GOP lawmakers have asked the SEC to get moving on plans to allow crypto in 401k retirement plans. In a letter on Monday, the group led by

House Financial Services Committee Chairman French Hill asked the SEC to provide swift assistance to the Labor Department in making the necessary changes. In August, the president signed an executive order instructing the SEC to make alternative assets, including crypto more accessible in 401ks. The lawmakers wrote, Every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity to enhance the net risk-adjusted returns. There are really only two takes on this policy. Some people are doing the math and realizing

that if even with a tiny allocation percentage, the $9 trillion 401k system would be a huge new buyer for crypto assets, then there's takes like this from Crypto Lounge, who wrote, just my opinion, of course, but exposing 401Ks to crypto is probably the worst move you can make, considering the wave of volatility that is on the horizon. Not smart at all. Stealing grandma's retirement is not cool, bro. As is so often the case, it's probably true that the middle take is the right one. The policy will drive inflows at the margin, but mostly it seems like it will just give people more choice. That's going to do it for today's breakdown. Appreciate you listening as always. And until next time, be safe and take care of each other. Peace.