Over the weekend, Bitcoin (BTC-USD) did the unexpected: the price fell below $79,999.99. On mid-Saturday, BTC prices fell by around 8% to trade at $77,550. The sell-off is a continuation of a downtrend that lasted for the last year.
Bitcoin failed to break out above $120,000 since the past summer. October marked the last attempt to rally. Buyer exhaustion is one of the reasons for Bitcoin to accelerate its drop.
Strategy (MSTR) is not helping the popular cryptocurrency. The firm, which holds 712,647 bitcoins, paid an average price of $66,385. Its aggressive buying of BTC helped push prices higher. Below the average price paid, Strategy risks margin calls. For example, it holds $8.22 billion in debt. Its preferred shares pay a dividend that yields 11.00%. The yield rose by 25 bps on the Variable Rate Series A Perpetual Stretch Preferred Stock (“STRC”).
What Happens Next
When gold and silver acted as a hedge against the weakening U.S. currency, Bitcoin lost its allure. After the metal meltdown from last week, Bitcoin’s relevance worsened even further. Recent metal investors sold their position to avoid further losses. They did not reinvest the liquidated assets into Bitcoin.
Watch out for prices of Ethereum (ETH-USD), XRP, and Solana (SOL) to fall in sympathy with Bitcoin’s decline.
