Bitcoin suffered its biggest drop since March falling 6% to roughly $85,500 amid fears of a new bear market.
- Strategy Inc. executives signaled they may sell Bitcoin as a "last resort" if their market valuation drops too low.
- Analysts predict Bitcoin could fall further to $60,000 as investors flee risk assets like crypto and tech stocks.
The cryptocurrency market is freezing over once again. Bitcoin took a massive hit on Monday and tumbled more than 6% to trade around $85,468. This marks the single worst trading day for the digital asset since March. The coin is now down more than 30% from its peak of over $126,000 set just two months ago in early October. The aggressive selloff has sparked genuine fear that the industry is entering another prolonged bear market.
The pain is not confined to Bitcoin alone. The rout has spread quickly to other major tokens like Ether and Solana. Ether fell 7.6% on Monday while Solana dropped about 8%. The damage also rippled through the stock market. Companies heavily exposed to crypto assets took a beating. Coinbase Global shares fell almost 5% and Circle Internet Group dropped similarly. Smaller players like BitMine Immersion Technologies and Forward Industries saw their stock prices decimated by double digits.
The most alarming signal for investors came from an unlikely source. Michael Saylor’s Strategy Inc. has long been the ultimate "diamond hand" holder of Bitcoin. The company pioneered the tactic of selling corporate debt to buy the digital currency. However the firm recently unveiled a plan that suggests they are preparing for hard times. Strategy raised $1.44 billion through a stock sale to build a cash reserve. This money is intended to cover dividend and debt payments for the next 12 to 24 months.
The shock amplified when executives broke their cardinal rule. They discussed the possibility of selling Bitcoin. CEO Phong Le admitted in a podcast that the company could sell some of its holdings as a "last resort." This would happen if the company's market cap drops below the net asset value of its Bitcoin pile. This ratio is known in the industry as mNAV. Michael Saylor reinforced this in a video presentation. He stated that selling would occur if it was in the best interest of shareholders.
This shift in rhetoric terrified the market. Strategy currently holds 650,000 Bitcoin worth roughly $56 billion. Even the suggestion that they might become sellers instead of buyers was enough to send their stock plummeting. Shares of Strategy fell as much as 12% during the day before closing down just over 3%. The company has lost nearly half its value this year as the crypto trade unwinds.
This current downturn stands out because it lacks a clear villain. Previous "crypto winters" were often triggered by massive frauds or implosions like the collapse of FTX or Mt. Gox. This time the decline is driven by simple economics and risk aversion. Investors are fleeing speculative assets across the board. Unprofitable tech companies and meme stocks are falling right alongside digital currencies. There is a general pessimism about the economy that is draining liquidity from riskier trades.
Experts warn that the bottom is likely not in yet. Patrick Horsman is the chief investment officer at crypto treasury firm BNB Plus. He believes the pain will continue and predicts Bitcoin could slide all the way back to $60,000. That would represent a catastrophic loss of value from the October highs. With no "white knight" buyers stepping in and major holders like Strategy looking to protect their balance sheets the path of least resistance appears to be lower.