Collings 01 low E, A strings getting dampened
 

I was playing a Collings 01 and noticed that when my arm is resting on the top, the low E and A strings sustain gets choked or dies out quickly. When I’m not touching the top with my arm they ring out/sustain just fine. I’ve played other small guitars and never experienced this. It’s kind of a cool dynamic but kind of annoying too. Is this natural to the design or does the guitar have some strange issue?

I guess I’d check for loose braces. On the other hand, it’s such a small body that it could just be the damping effect from your arm - it might depend on how much pressure your arm puts on the top given your normal posture.