Bitcoin faces mounting pressure beyond Strategy sale
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Alarm bells are going off around bitcoin, with most of the headlines focusing on the biggest bitcoin treasury company's very big decision to sell a small amount of bitcoin.
Why it matters: A bitcoin sale by Michael Saylor's Strategy has drawn outsize attention, but geopolitical uncertainty and competition from stocks are posing bigger near-term risks to the cryptocurrency's price.
State of play: Some $2.8 billion left U.S.-listed spot-bitcoin ETFs in nine-straight sessions through May 28 — the longest stretch of withdrawals in the funds' two-year history, Bloomberg noted.
- Since hitting an all-time high of $126,080 in October, the price of bitcoin fell over 40% through last week.
Between the lines: Analysts point to several overlapping pressures:
- One is the Iran war, and investors' waning appetite for the riskiest risk assets amid soaring oil prices and fresh inflation worries.
- Another is the boom in AI-related stocks, leading some institutional investors to rebalance portfolios and go even lighter on bitcoin.
- In short, there have just been so many better ways to find returns, Bloomberg's Joe Weisenthal notes.
And then there's Strategy. The bitcoin-holding behemoth disclosed Monday that it had sold 32 bitcoin in the last week of May, raising $2.5 million to help fund a dividend on its preferred stock.
- That's a tiny fraction of the 843,706 bitcoin the company still holds in its treasury — but it's the signal that mattered.
- Saylor, after all, has made a habit in recent years of saying that Strategy would "never" sell bitcoin, and it hadn't since late 2022.
- Its disclosure has helped send bitcoin down another 8% since Monday morning, and it now trades around $67,000.
The big picture: Bitcoin treasury companies have emerged in recent years as a significant structural force in supporting the price of bitcoin.
- Saylor's Strategy is the biggest and most important bitcoin treasury company of them all, holding $57 billion worth of the cryptocurrency today.
What we're watching: Saylor signaled Strategy's bitcoin sale earlier in May on the company's earnings call, pitching it as a financially beneficial way to pay its preferred dividend — while adding that Strategy still planned to "buy more bitcoin than we sell."
- The market will be watching what Strategy does next.
