Bitcoin, 'Extreme Tension' Over Strategy's Loss Zone Fear...Sell-off Bomb if $74,500 Breaks?

▲ Bitcoin (BTC), cryptocurrency decline/AI-generated image

Bitcoin (BTC) is facing a test, going beyond a simple correction phase, with institutional fund outflows, the possibility of Strategy's sell-off, and high-interest rate pressure all converging.

Guy Turner, host of the cryptocurrency YouTube channel Coin Bureau, stated in a video uploaded on May 25 (local time) that US Bitcoin spot ETFs recorded a net outflow of $649 million on May 18 alone, and the cumulative net outflow for 14 days until May 23 exceeded $2.26 billion. He diagnosed, "While the cumulative inflow since the launch of BlackRock's IBIT was approximately $64.8 billion, the current assets under management have decreased to $61.75 billion," adding, "The average IBIT investor is now in a loss-making position."

The exit of institutional investors was also presented as a key burden. Based on Q1 13F disclosures, Jane Street reduced its IBIT holdings by 71%, Fidelity reduced its FBTC holdings by 60%, and Strategy reduced its stake by 78%. Harvard Management Company reduced its IBIT position by 43% and liquidated its entire $86.8 million Ethereum (ETH) position. Turner assessed that a significant portion of the funds, which were considered long-term institutional investors, were tactical funds that quickly exited in the face of macroeconomic shocks.

The Strategy variable also emerged as a new pressure factor in the market. Co-founder Michael Saylor and Strategy CEO Phong Le hinted at the possibility of selling Bitcoin for preferred stock dividend payments, convertible bond redemptions, and financial structure optimization during their Q1 earnings call on May 5. Strategy holds 843,738 BTC at an average of $75,700, and Turner believes that if Bitcoin consistently closes below $74,500, the market could price in the risk of forced selling, regardless of whether an actual sell-off occurs.

The macroeconomic environment is also not favorable for Bitcoin. The US 30-year Treasury yield was presented at 5.07%, the 10-year Treasury yield at 4.56%, and the Consumer Price Index (CPI) at around 3.8%. CME FedWatch reflected a 54% probability of a rate hike and a 1.5% probability of a rate cut by the Federal Open Market Committee (FOMC) in December. Turner explained that in an environment where long-term Treasury yields of around 5% are possible, the cost of holding non-yielding Bitcoin increases, and it is difficult to push the market up solely on expectations of rate cuts.

However, he analyzed that the on-chain structure is far from a completely collapsed market. Long-term holders control 78.3% of the circulating supply, reaching cycle high levels, and exchange holdings are at a 7-year low of approximately 2.21 million BTC. Whale wallets holding more than 1,000 BTC have accumulated about 270,000 BTC in the last 30 days.

Turner stated, "$70,000 is the level where the 2021 high turned into support, and $66,000 is the global risk asset deleveraging turning point," suggesting that if the market recovers to $82,000-$83,000, the market narrative could turn bullish again. He also added, "If the US crypto market structure bill passes the Senate before the recess and ETF net inflows exceed $300 million per day for 3 to 5 consecutive days, the possibility of $125,000 to $150,000 by year-end will open up." Conversely, he analyzed that if these conditions are not met, Bitcoin could remain in a consolidation range between $75,000 and $85,000 during the summer.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*