Bitcoin recently wrapped up what is being called the biggest week for cryptocurrencies, yet it saw a notable decline of over 5%. This drop in Week 38 signifies the end of the third quarter and September, in which Bitcoin managed an uptick of about 1% overall.
This aligns with the typical trend observed during this time of year, historically considered one of the weakest for the crypto market. However, several factors might have influenced the recent downturn.
One significant event occurred last Friday, when options worth over $17 billion expired. The pain price—where option holders face the most loss while option writers profit the most—was set at $110,000, which acted as a sort of anchor for current prices.
From a technical standpoint, the cost basis for short-term holders is approximately $110,775. This figure reflects the average price at which coins were acquired on-chain over the preceding six months. It’s worth noting that Bitcoin had tested this level back in August. Normally, during a bull market, it tends to return to this line several times, although this year it has only dipped below it once.
When we take a step back, it’s crucial to determine if Bitcoin is still on an upward trajectory, marked by progressively higher lows, to assess the sustainability of the rally.
Analyst Caleb Franzen highlighted that Bitcoin has recently fallen below its 100-day exponential moving average (EMA), while the 200-day EMA sits at around $106,186. A considerable low of roughly $107,252 was recorded on September 1, and Bitcoin really needs to exceed that benchmark to maintain a positive overall trend.
Macro Overview
In the broader economic landscape, the U.S. economy expanded at an annualized rate of 3.8% in the second quarter, significantly outpacing its expected 3.3% growth and marking its strongest performance this year. Unemployment claims also saw a decline, dropping by 14,000 to a total of 218,000, which is the lowest since mid-July. Consumer spending data aligned well with market forecasts, while the U.S. Core PCE Price Index—a key inflation gauge excluding food and energy—rose by 0.2% from the previous month in August.
Meanwhile, 10-year U.S. Treasury yields have rebounded from a support level of 4% and are now trading close to 4.2%. The Dollar Index (DXY) continues to show long-term strength at about 98. In the metals market, silver is gaining traction, nearing historic highs of approximately $45—levels not seen since 1980 and 2011.
Bitcoin, on the other hand, is more than 10% below its peak.
Bitcoin-Related Stocks
Companies dealing in Bitcoin are grappling with substantial pressure on their multiple asset value (MNAV). The Strategy (MSTR) has barely eked out a profit since the beginning of the year, even dipping below a negative return of $300 at one point.
The MSTR to BlackRock iShares Bitcoin Trust ETF (IBIT) ratio has plummeted to a 4.8 low since October 2024, suggesting that the largest Bitcoin financial entity hasn’t performed well in the past year.
As of Friday, Strategy’s Enterprise MNAV is listed at 1.44. This figure represents a valuation based on the readily available stocks—something to keep in mind.
The silver lining for MSTR is that all returns through its offerings—namely the three permanent preferred stocks, STRK, STRC, and STRF—are poised to acquire more Bitcoin.
Nonetheless, a critical issue for MSTR lies in the dwindling volatility of Bitcoin itself. The implicit volatility levels—an indicator of market forecasts for future price swings—have dropped to below 40, the lowest they’ve been this year.
Michael Saylor tends to view MSTR as a volatility play on Bitcoin. For context, MSTR’s implicit volatility stands at 68, with the annual standard deviation of daily returns recently slumping from 89% to 49% over the last 30 days.
For stocks, this kind of decline can create challenges since higher volatility often draws in speculators, opens up trading opportunities, and captures investor interest.
Shifting gears to Metaplanet, which ranks as the fifth largest Bitcoin financing company, they hold 25,555 BTC and still have around $500 million to invest in international products. Still, their stock price struggles at about 517 yen ($3.45), down 70% from its all-time high.
Metaplanet’s MNAV has sharply fallen from 8.44 in June to a mere 1.12, with a market cap of around $3.94 billion set against Bitcoin’s NAV of $2.9 billion. The average acquisition cost for Bitcoin there is approximately $106,065.
