Bitcoin faced continued pressure on Tuesday, over 24 hours after the announcement that Strategy had sold 1,690 bitcoins to finance the repurchase of its preferred stock, leading to a decline in the cryptocurrency’s value. While bitcoin initially appeared to have strong support just below $64,000, market data indicate it lost momentum after breaching that level. This trend persisted from Monday nite until just before 4 a.m. on Aug. 11, when a rally propelled prices beyond $64,400 around 8:15 a.m. However, the rally was short-lived, as the cryptocurrency shed more than $1,000 over the next three hours, plummeting to an intraday low of 63,394. As of 2:30 p.m., bitcoin was trading just above $63,400, reflecting a decline of 0.7% over the past 24 hours.
The cryptocurrency’s price action over the past 24 hours once again demonstrated that the value of liquidated long bets exceeded that of short liquidations. Data indicate that among the $39 million liquidated across the market, long positions comprised $34.4 million, whereas short positions represented just under $5 million. While corporate selling and a substantial $5 billion liquidation authorisation from Strategy exerted pressure on bitcoin, the effect seemed to be somewhat mitigated by $854 million in weekly inflows into spot bitcoin exchange-traded funds. Analysts indicate that these inflows signify the absorption of approximately 13,300 bitcoins, which exceeds the roughly 3,150 bitcoins the network issued during the same timeframe by more than four times.
Analysts noted that the transition from the peak capital exodus in June, during which ETFs liquidated nearly 65,800 bitcoins, to robust demand within a span of six weeks signifies the most significant trend shift in spot flows observed this year. Driven by significant inflows into Blackrock’s IBIT and Fidelity’s FBTC, demand for ETFs has resurfaced, buoyed by favourable macroeconomic conditions such as declining oil prices and easing U.S. labour market indicators, which have tempered expectations for an interest rate increase in September.
However, Bitfinex cautioned that a sustained breakout is limited by considerable overhead supply. An estimated 1.79 million bitcoins are held on-chain, with an average cost basis ranging from $62,000 to $65,000. In light of ongoing corporate treasury liquidations and elevated long-term Treasury yields, analysts anticipate that bitcoin will remain confined to its existing trading range. This situation is expected to persist until ETF inflows consistently surpass selling pressure and softer inflation data contributes to a reduction in long-term yields.
