In an interesting turn of events over the weekend, Bitcoin saw a sharp liquidity waterfall and the price fell to $76,000. BTC investors, who barely recovered from mid-week losses, may be struggling as rare weekend volatility pushed them lower.
One of these investors is Michael Saylor, whose company Strategy was briefly underwater due to the recent decline in Bitcoin prices. The company’s average cost basis for Bitcoin holdings of about $76,000 was tested as record levels of liquidations rocked cryptocurrency markets.
Strategy holding BTC on the verge of unrealized loss
Over the past few months, Bitcoin price has struggled to stay above critical levels, including the 360-day moving average and short-term holder (STH) realized price. Interestingly, the top cryptocurrency added another level of cost basis to this growing list during the recent price drop.
Strategy, the largest corporate Bitcoin holder, was briefly in the red after the price of BTC fell below its cost-of-holding threshold at around $76,000. The company, which currently holds more than 712,000 BTC, has struggled in recent months, with its stock price (currently $143) plummeting from a local high of $455.
Source: @JA_Maartun on X
Although the current Bitcoin price is approximately 2.5% above the average cost basis for this strategy, there is still a real threat to the top cryptocurrency. If BTC falls and remains below this level, Bitcoin treasury companies could incur significant unrealized losses, further reducing market confidence.
There has been no indication over the past few years that the Strategy would offload its Bitcoin holdings if they ran into unrealized losses. Interestingly, Michael Saylor, Strategy’s president and founder, posted on the X platform regarding the recession, saying the company was “built for the long term.”
However, there could be a much bigger dynamic, especially since continued trading below the average cost benchmark could spark scrutiny of the company’s Bitcoin accumulation strategy.
Bitcoin price bottom could take months to form
Julio Moreno, head of research at CryptoQuant, warned investors to stop looking for a bottom after a new downtrend. Bitcoin’s recent drop below $76,000 was not a bull market correction, according to an on-chain expert. Because the bearish phase began last November.
Moreno wrote in a post about X:
Indicators that help you find a bottom in a bull market are useless right now.
As of this writing, the BTC price is around $78,070, down more than 6% in the last 24 hours. The top cryptocurrency fell about 12% during the week, according to CoinGecko data.
The price of BTC on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image by Michael Saylor/X, TradingView chart
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