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Key Takeaways
- Strategy is attempting to reassure investors over its Bitcoin risk.
- The firm said its Bitcoin holdings would cover convertible debt by nearly six times even if BTC fell to its average cost basis of $74,000.
- Bitfinex highlighted early signs of renewed demand.
Strategy moved to reassure investors over the risk of its Bitcoin holdings on Tuesday, claiming its balance sheet remains resilient even if BTC extends its recent downturn.
The comments came as Bitfinex analysts pointed to a potential rebound in demand, which could have the potential to turn the course of the declining market.
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Strategy’s Bitcoin Risk
In a post on X, the company said that if Bitcoin were to fall to its average purchase price of $74,000, its holdings would still cover its outstanding convertible debt by 5.9 times.
The firm added that even at a Bitcoin price of $25,000, coverage would remain double the value of its liabilities.
Strategy founder Michael Saylor has remained confident about his Bitcoin accumulation mission despite recent market weakness.
On Monday, he highlighted rising levels of Bitcoin-backed credit, citing data showing steady weekly growth from mid-September to late November.
The comes followed news that Strategy had once again been excluded from the S&P 500 Index.
The company currently holds about 649,870 Bitcoin, worth roughly $56 billion at recent prices.
Wall Street Pulls Back
The company’s comments come as U.S. institutional investors reduced their exposure to Strategy during the third quarter, trimming an estimated $5.38 billion in holdings, according to aggregated 13F filings.
Major asset managers, including Capital International, BlackRock, Vanguard and Fidelity, each cut their positions by close to $1 billion.
The pullback occurred even as Bitcoin traded around $95,000 during the period, well above current levels.
With spot Bitcoin exchange-traded funds now widely available, institutions managing Bitcoin risk no longer rely on Strategy as a primary indirect method for gaining Bitcoin exposure.
Could Bitcoin Be Rebounding?
Bitcoin’s recent slide has raised questions about whether the market may be nearing a turning point after four straight weeks of declines.
Analysts at Bitfinex said on Tuesday that early signs of renewed demand are emerging, even as Bitcoin remains well below its early-November levels.
Although November has historically been Bitcoin’s strongest month, both October and November have been unexpectedly weak this year.
Bitfinex noted a recent uptick in Bitcoin whale activity as a possible sign that demand is returning.
Since Nov. 11, the number of wallets holding more than 100 BTC has risen by 0.47%, according to Santiment.
“Retail capitulation will generally play out well for crypto prices in the long run,” Santiment wrote on X.
CCN’s Outlook
At the time of reporting, Bitcoin was trading around $86,780, down nearly 5% over the past week.
Valdrin Tahiri, an analyst at CCN, said Bitcoin’s long-term wave pattern indicates the market has moved into a corrective phase after completing a multi-year advance from its 2022 lows.
His analysis shows a five-wave rally from late 2022 that now appears to be complete.
Tahiri believes the first leg of an A-B-C corrective structure — known as “wave A” — is still unfolding and could push Bitcoin toward the 0.5 Fibonacci retracement level near $71,000.
Based on this framework, he expects Bitcoin could stabilise around $73,000 by the end of 2026, before potentially falling toward $57,000 by late 2027.
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