The leading cryptocurrency dropped by nearly 4% to $64,692 in late New York trading, marking its lowest price since February 28. This downturn intensified a decline that has erased more than $160 billion in market capital this week. The sell-off really began earlier in the week when Strategy unloaded about $2.5 million of Bitcoin from its holdings, which are valued around $56 billion.
Rajiv Sawhney from Wave Digital Assets pointed out that, although this sale was minor—only 32 tokens from a vault of 843,706—it shattered the market’s faith in Michael Saylor’s longstanding “never sell” philosophy.
Sawhney stressed that the sale was financially insignificant when set against a $62 billion position, but what it signifies for market sentiment is more crucial.
Bitcoin’s struggles contrast starkly with a recent upswing in stocks. The Nasdaq 100 index hit a new high on Tuesday, underscoring the growing separation between cryptocurrencies and tech shares. Investors once viewed Bitcoin as a high-risk technology asset, but that perception seems to have faded since last October’s market crash.
This shift is particularly pronounced as investments pour into artificial intelligence stocks. Over the past year, the Nasdaq 100 has surged 41%, while Bitcoin has plunged 38% and remains 48% below its peak from last year.
Carney Mack from FXHB Asset Management admitted they’ve started shifting some investments from Bitcoin into AI stocks. He noted that AI now presents a more attractive risk-reward scenario when compared to digital assets, prompting some reevaluation of portfolios.
Data from Glassnode indicates a shift in the demographics of Bitcoin buyers since May. During last month’s rally, it was primarily large holders (those with 1,000 to 10,000 Bitcoin) leading the accumulation. However, these larger buyers have remained inactive, leaving smaller wallets and major whales to pick up slack during market dips.
Mack observed that cryptocurrencies currently lack robust short-term drivers and their performance is increasingly tied to liquidity and macroeconomic factors. Some planned crypto-related IPOs have also faced delays, unlike AI firms that continue to attract investor interest.
Recently, K Wave Media, which trades on the Nasdaq, announced it would abandon plans to invest about $500 million in Bitcoin to focus instead on AI data centers and GPU infrastructure. Additionally, cryptocurrency miner Bitdeer has liquidated all its Bitcoin assets to fund its expansion into AI and high-performance computing.
Capital flows reveal the pressure Bitcoin faces. Investors have pulled nearly $4 billion from U.S.-listed Bitcoin exchange-traded funds in the past 12 days, marking a record outflow. Around $1 billion worth of bullish positions in perpetual futures have vanished in the last 24 hours.
The small sale by Strategy was significant for a market built on the premise that large holders would keep accumulating assets. The current concern is whether this event has swayed the underlying sentiment propelling Bitcoin.
Already, many of the new Bitcoin accumulators that appeared after Strategy have either sold their tokens or are feeling pressure to do so, which raises the risk of a chaotic unwinding of their positions. According to some estimates, publicly listed companies collectively hold about 1.24 million Bitcoins.
There are also fears that issues affecting Strategy’s stock will have broader implications. The stock has declined by 18% this week, marking a drop of over 70% from its all-time high.
Pratik Kalla from Apollo Crypto warned that funds tied to Strategy stocks could see increased volatility if investors start to doubt the sustainability of its accumulation strategy. Since many of these funds amplify price movements of Strategy’s stock, any drop in confidence could lead to significant losses and prompt portfolio rebalancing.
“It’s a vicious feedback loop,” Kalla explained. “As MSTR falls, it drags down ETFs linked to it, causing further sentiment declines as losses accumulate.”
