Bitcoin 'On Edge' Amid Strategy's Loss Zone Fears...Sell-Off Bomb if $74,500 Breaks?

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

Bitcoin (BTC) has gone beyond a simple correction phase and is now on a test bed where institutional fund outflows, the possibility of Strategy selling, and high-interest rate pressures are simultaneously overlapping.

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 exceeded $2.26 billion over 14 days until May 23. He diagnosed, "While the cumulative inflow since BlackRock IBIT's launch was approximately $64.8 billion, its assets under management have now decreased to $61.75 billion," adding, "The average IBIT investor has entered a loss zone."

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

The Strategy variable has also emerged as a new pressure point 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 release 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 actual selling occurs.

The macroeconomic environment is also not favorable for Bitcoin. US 30-year Treasury yields were quoted at 5.07%, 10-year Treasury yields at 4.56%, and the Consumer Price Index (CPI) was around 3.8%. CME FedWatch reflected a 54% probability of a rate hike and a 1.5% probability of a rate cut at the December Federal Open Market Committee (FOMC). Turner explained that in an environment where long-term Treasury yields of 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, the on-chain structure was analyzed as being far from a completely collapsed market. Long-term holders control 78.3% of the circulating supply, reaching cycle high levels, and exchange holdings recorded a 7-year low at approximately 2.21 million BTC. Whale wallets holding more than 1,000 BTC accumulated approximately 270,000 BTC in the last 30 days.

Turner stated, "$70,000 is the area where the 2021 high turned into support, and $66,000 is the global risk asset deleveraging pivot point." He suggested that if Bitcoin 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 recess and ETF net inflows continue for 3 to 5 consecutive days at over $300 million per day, 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.*