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In an interesting turn of events, Bitcoin experienced an abrupt liquidity cascade over the weekend that saw the value fall as little as $76,000. BTC investors who’ve barely recovered from their weekday losses have to be feeling hard hit as rare weekend volatility sent them further lower.
One of those investors can be Michael Saylor, whose firm Strategy was briefly under pressure following Bitcoin's recent price drop. The average cost of the corporate's Bitcoin holdings of around $76,000 was put to the test as record liquidations rocked the crypto market.
Strategy’s BTC holdings are on the verge of unrealized losses
Over the past few months, Bitcoin's price has struggled to remain above critical levels, including the 360-day moving average and short-term holder realized price (STH). Interestingly, the leading cryptocurrency has added one other cost base layer to this growing list during its recent price decline.
Strategy, the biggest corporate Bitcoin holder, briefly fell into the red after the BTC price fell below the associated fee basis of its holdings of around $76,000. The company, which currently holds greater than 712,000 BTC, has struggled greatly in recent months as its share price (now at $143) plummeted from local highs of $455.
Source: @JA_Maartun on X
Although the value of Bitcoin is now about 2.5% above the typical cost basis of this strategy, there continues to be an actual threat to the leading cryptocurrency. Should BTC fall and stay below this level, the Bitcoin finance company would suffer a large unrealized loss, which may lead to an extra decline in market confidence.
In recent years, there have been no signs that Strategy would dump its Bitcoin holdings in the event that they fell into unrealized losses. Interestingly, Strategy Chairman and Founder Michael Saylor commented on the downturn on the X Platform, saying the corporate is “built for the long haul.”
However, there might be much larger dynamics at play, particularly as sustained trading below average cost base could put the corporate's Bitcoin accumulation technique to the test.
It could take months for the underside of the Bitcoin price to form
Julio Moreno, head of research at CryptoQuant, warned investors to stop in search of bottoms after a brand new downtrend. According to the on-chain expert, Bitcoin's recent decline to below $76,000 shouldn’t be a bull market correction because the bear phase already began last November.
Moreno wrote in a post on X:
The indicators that help find bottoms in a bull market are currently useless.
As of this writing, the value of BTC is around $78,070, reflecting a decline of over 6% within the last 24 hours. According to CoinGecko data, the leading cryptocurrency is down around 12% on the weekly timeframe.
The price of BTC within the day by day timeframe | Source: BTCUSDT chart on TradingView
Featured image by Michael Saylor/X, chart by TradingView
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