[SINGAPORE] Bitcoin has fallen about 28 per cent this year, with its latest slide sparked by Strategy unloading the cryptocurrency.
The world’s largest corporate holder of Bitcoin sold 3,588 tokens worth about US$216 million between Jun 29 and Jul 5 to fund dividends on its digital credit securities. The trades work out to an average of US$60,000 per Bitcoin.
The disposal marked its largest Bitcoin sale since 2022, despite long-time Bitcoin advocate and company chief Michael Saylor’s repeated declarations that the company would not sell its holdings.
The move has raised concerns that if Strategy continues to trim its Bitcoin holdings to raise cash, it could trigger prolonged volatility in the world’s largest cryptocurrency.
Even so, market observers believe the latest weakness is temporary, with some saying the recent pullback could present a buying opportunity for investors in South-east Asia.
A headwind or a tactical move?
The optics of a staunch Bitcoin advocate liquidating a not-insignificant amount of tokens have raised fears that cash-raising sales could become a structural headwind.
Carsten Menke, head of next-generation research at Julius Baer, wrote in a Jul 2 note: “Forced selling by treasury companies is an overhang not only for Bitcoin, but digital assets more broadly.”
However, Vincent Chok, chief executive of digital assets custodian First Digital, pointed out that Saylor’s sale was likely a tactical manoeuvre designed to satisfy traditional credit rating agencies, rather than a fundamental loss of conviction.
Hassan Ahmed, Singapore country director of crypto platform Coinbase, also noted that the sale has not triggered a broader change in strategy among other large corporate holders.
Danny Chong, co-chairman of non-profit Digital Assets Association (DAA), agreed that there is no evidence of broad institutional capitulation.
“Some institutional selling is inevitable as Bitcoin becomes more widely held by funds, corporates and treasury investors,” he noted.
Instead, he said the key question is whether the selling is driven by a loss of conviction or simply by liquidity needs, portfolio rebalancing or treasury management.
So why is Bitcoin low now?
Ahmed attributed Bitcoin’s near-term softness to broader macroeconomic forces. The cryptocurrency is a highly liquidity-driven asset, making it sensitive to hawkish US Federal Reserve signals.
Chong echoed this sentiment, cautioning against attributing the recent drop to a single factor. While Strategy’s sale may have triggered headlines, Chong pointed out that the broader drivers are macro conditions, capital flows and risk sentiment.
“As institutional participation grows, Bitcoin is increasingly affected by portfolio allocation decisions that also influence equities, gold and other major asset classes,” Chong said.
Despite the price drop, the underlying structure of the largest cryptocurrency’s market is showing signs of resilience, said experts.
Ahmed said that Bitcoin has matured significantly as an asset class. Because it now takes substantially more capital to move the market, historical volatility is dampening.
While previous market cycles suffered drawdowns of 60 to 80 per cent, Ahmed suggested that the current cycle’s maximum drawdown might cap out much lower, potentially around 53 per cent from its peak.
Chong agreed that Bitcoin’s fundamentals have not weakened.
“Adoption continues to grow, institutional participation is increasing, and market infrastructure is much more mature than before,” he said, noting that recent price movements reflect sentiment and positioning rather than a deterioration in Bitcoin itself.
Because Bitcoin is becoming more institutionalised and access is improving through regulated products, Chong said that long-term investors may be encouraged to step in during periods of weakness, “making a sustained trend of lower lows less likely over the medium to long term”.
Rebound to come
Despite the short-term fear, sentiment remains opportunistic for Bitcoin.
First Digital’s Chok expects Bitcoin to begin rebounding around or after the end of the year, projecting a near-term price floor around US$52,000 to US$53,000. The cryptocurrency was trading at about US$63,000 on Thursday (Jul 9).
Ahmed pointed to a potential market turnaround by late Q3 or Q4, provided macro indicators such as inflation and jobs data begin to ease.
South-east Asian investors are also increasingly viewing the recent dip as an entry point, said Chok.
They have historically been more open to the relatively newer asset class and often favour holding tokens natively in cold wallets, he added.
For retail and South-east Asian investors navigating the current market, DAA’s Chong said that short-term institutional selling should not automatically alter a long-term investment thesis. However, investors must remain realistic about the inherent volatility.
Ultimately, while the temptation to sell now and buy back lower is high, both Ahmed and Chok warned against actively trading the volatility.
“Time in the market is just way more important than timing the market,” said Ahmed.