Bitcoin breaks below $60,000 as Strategy's MSTR flywheel strains. Retail fades, institutional conviction fades. Next catalyst: Friday's $10B options expiry.
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Bitcoin slid back below $60,000 on Wednesday, breaking a support level that had held since early June. The move came as two pillars of crypto demand – Strategy Inc. and retail traders – showed signs of weakening. Almost $800 million in crypto long positions were liquidated in the past 24 hours, CoinGlass data show.
“The market is repricing the whole MSTR and STRC flywheel,” said Shiliang Tang, managing partner at Monarq Asset Management. Strategy’s common shares fell for a sixth consecutive session, hitting the lowest since February 2024. The effective yield on its preferred stock climbed to about 14%.
The drawdown arrives ahead of Friday’s quarterly expiration of roughly $10 billion in Bitcoin options on Deribit. That event could amplify volatility, traders said.
Strategy’s model is straightforward: issue stock or preferred securities, use the proceeds to buy Bitcoin, then repeat. The cycle relies on a rising Bitcoin price to keep the equity and preferred instruments attractive. When Bitcoin falls, the math tightens.
Strategy has resumed purchases after a recent sale that briefly calmed market fears. The preferred securities are telling a different story. STRC sank to $79.85 on Wednesday, extending a decline that many investors read as a vote of no confidence in the company’s ability to keep funding purchases at the previous pace.
“As the path of interest rates continues to shift further away from a potential cut, it is impacting the inflation hedge story of the asset,” said Stephane Ouellette, CEO of FRNT Financial.
Retail traders used to step in during selloffs, and Strategy acted as a buyer of last resort. ETF buyers added a third layer of support. Many who entered near the highs are now underwater, making them less willing to absorb further losses or add exposure.
The institutional case has also lost ground. Bitcoin did not act as a reliable hedge during Middle East tensions or the inflation scares of late 2024. Instead it traded like a high-beta risk asset, weakening the diversification pitch that drew allocators in earlier years.
The result is a market that depends on institutional capital at the very moment that capital is questioning the thesis.
“It feels like some sellers in a market where there are no buyers,” said Noelle Acheson, author of the “Crypto is Macro Now” newsletter.
Friday’s options expiry is the nearest concrete event. A close below $60,000 into the weekend would open a test of the October lows near $55,000.
A recovery above $62,000 would suggest the support zone still holds. The action in STRC preferred shares will provide a real-time gauge of confidence in Strategy’s model.
Read more about MSTR stock and broader stock market analysis.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.