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Bitcoin fell below the $63,000 level due to strong selling pressure, indicating weakening risk appetite in the cryptocurrency market. According to the latest data, the price of Bitcoin dropped to $62,644, losing over 5% in value in the last 24 hours.
The market downturn wasn’t limited to Bitcoin. Ethereum fell by over 5% to $1,689, BNB dropped 4.90% to $576, XRP lost 5.83% to $1.14, and Solana fell 6.98% to $68.79. Among the top 10 cryptocurrencies, one of the sharpest drops was seen in Hyperliquid, which experienced a loss of over 11%.
The decline is believed to stem from the hawkish stance adopted by the Fed in its statement following yesterday’s interest rate decision.
The sharp pullback in the cryptocurrency market has also led to large liquidations in the futures market. In the last 24 hours, the total amount of liquidations reached $599.69 million. Of this, $496.27 million was from long positions and $103.42 million from short positions. In the last 4 hours alone, $267.62 million worth of positions were liquidated.
Concerns about Strategy also stood out amid the selling pressure in the market. Strategy’s preferred stock, STRC, which pays an annual dividend of 11.5 percent, fell to an all-time low of $85.32. The fact that STRC is trading below its nominal value of $100 is interpreted as the market not finding the current dividend yield sufficient.
For STRC to approach the $100 level again, Strategy may need to increase its dividend rate. However, this would also increase the company’s annual cash obligation. It is stated that Strategy is currently financing these payments by selling MSTR shares, and with MSTR’s net asset value premium approaching 1x, the possibility of financing through new share sales is narrowing.
This situation has heightened concerns in the market that Strategy may be forced to sell Bitcoin in the future. In response to these concerns, the company stated in its latest 8K filing that its Bitcoin reserves are large enough to cover its annual dividend and interest expenses of $1.7 billion for 32 years. According to Strategy, a mere 3.1% annual increase in Bitcoin’s value is sufficient to offset these obligations.
Despite this, the fact that STRC is still trading approximately $14 below its nominal value of $100 indicates that the market is not entirely convinced by the company’s statements. Strategy, which has stood out as one of the world’s largest institutional Bitcoin buyers to date, is seen as a significant pressure point in the market due to the potential for regular Bitcoin sales.
*This is not investment advice.