Bitcoin tumbles after Strategy sale unnerves crypto traders
Bitcoin is heading for its largest weekly loss since November 2022 after the cryptocurrency’s biggest corporate cheerleader sold a portion of its giant holdings for the first time in more than three years. The price fell nearly 5 per cent on Friday to $60,541, leaving its losses this week at almost 18 per cent. The sell-off came after Michael Saylor’s bitcoin-hoarding venture Strategy said it had sold 32 bitcoin last week for a total of $2.5mn, only its second sale since it began buying the tokens in August 2020.
It said it made the sale to pay coupons to holders of its preferred stock, part of a financing model that has raised questions about its sustainability.
Publicly traded Strategy is the largest corporate holder of bitcoin and has championed a “hodl” approach directed at retail investors — crypto slang for holding in perpetuity. Before last week’s sale it had bought 843,738 bitcoins in 110 transactions for almost $64bn.
Strategy’s pivot suggested more losses were coming for bitcoin holders, said Peter Schiff, a financial commentator and prominent sceptic of the cryptocurrency.
“It’s not that small sale that did it, but the idea that it may be the first of many much larger sales,” he said on X.
Bitcoin and other cryptocurrencies have come under additional pressure as retail investors have turned their attention to the rally in tech stocks set off by the AI boom. Bitcoin fell to a 17-month low of just over $60,000 in early February.
That was some way below its level of about $67,000 on the eve of Donald Trump’s election as president in November 2024, after he promised to make the US the “crypto capital of the world”. The price then surged almost 90 per cent to a peak of more than $125,000 a token last October before beginning its decline.
Saylor, founder of Strategy, was a pioneer of spinning public companies into crypto-hoarding vehicles, a business model that comes under pressure when the price of bitcoin falls.
Saylor has raised billions of dollars to finance his purchases by selling convertible bonds and other equity-linked instruments, loading the company with debt.
He has raised $10.5bn in the past 10 months by selling a type of perpetual preferred stock known as Stretch that pays annual dividends of 11.5 per cent but has no potential upside linked to the stock price.
Strategy’s latest sale was made to fund payments to holders of its preferred stock, according to a May 31 filing to the Securities and Exchange Commission. Its one previous sale in December 2022 was part of a package of sales and purchases designed to generate a tax benefit.
Saylor has maintained his bullish posture, calling the recent fall in bitcoin’s price “an opportunity” on X. The price had rallied about 35 per cent between its February low and a recent peak in May before falling again.
Analysts say many retail traders have left the crypto market to focus on equities, as the Iran war and excitement over AI have prompted sharp moves in prices. Elon Musk’s SpaceX has kicked off the largest potential stock listing in history, with AI labs such as Anthropic and OpenAI set to follow later this year.
“Retail is completely gone from the market,” said Jasper de Maere, strategist and trader at Wintermute, a crypto trading company. “Those investors are pivoting back into equities.”
Legislation governing digital assets is facing a stalemate in the Senate after opposition from US banks despite months of behind-the-scenes negotiations.
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