Bitcoin Faces Downward Pressure Amid ETF Outflows and MicroStrategy Concerns
Bitcoin (BTC) is currently worth more than $114,000, which is a small increase of 0.6% over the past 24 hours. However, big changes in the
Quick overview
- Bitcoin's current value is over $114,000, reflecting a slight 0.6% increase in the last 24 hours.
- MicroStrategy's market premium has significantly decreased from 3.4x to 1.58x, indicating reduced demand for leveraged Bitcoin exposure.
- Open interest in Bitcoin has surged past $40 billion, raising concerns about potential liquidation cascades due to crowded long positions.
- The critical support level at $108,600 will be crucial for Bitcoin's future price movements, with potential declines to $98,200 or $75,000 if it breaks.
Bitcoin BTC/USD is currently worth more than $114,000, which is a small increase of 0.6% over the past 24 hours. However, big changes in the market are threatening the cryptocurrency’s momentum. The biggest worry is that MicroStrategy’s market premium has dropped sharply from 3.4x to just 1.58x. This shows that there is less demand for leveraged Bitcoin exposure through the corporate treasury model.
Analyst Miles Deutscher points out that MicroStrategy’s market-implied net asset value (mNAV) premium, which is the driving force behind Michael Saylor’s aggressive Bitcoin buying strategy, has dropped drastically. This premium is the extra amount that investors have to pay on top of the company’s Bitcoin holdings value in order to get leveraged exposure to the cryptocurrency. The big drop shows that the strong feedback loop that used to let MicroStrategy do better than Bitcoin itself is breaking down.
The effects go beyond just one business. Investors are upset about MicroStrategy’s new equity ATM guidelines, which takes away the 2.5x mNAV protection for issuing shares. Some people are worried about “death spiral” scenarios in which the corporation would have to sell shares at lower and lower prices, which would create a destructive cycle that could make Bitcoin’s price swings even bigger.
BTC/USD Technical Indicators Flash Warning Signals as Open Interest Surges Past $40 Billion
From a technical point of view, Bitcoin is under more and more strain from many different sources. Open interest on all exchanges has shot up beyond $40 billion, getting close to its all-time high and up an incredible 150% from August 2024 levels of $15 billion. This rise, together with financing rates that stay high, shows that the long trade is getting more crowded, which makes big liquidation cascades more likely.
The cryptocurrency has already dropped from its all-time high of $124,474 on August 13 and is now heading toward the $113,000 level. The next significant support zone is around $110,000. Bitcoin’s break below the long-term rising trendline that has been in place since the April lows around $75,000 is more worrying. This might lead to deeper retracements that target $98,200 or possibly a return to $75,000.
Institutional Demand Remains Strong Despite Bitcoin ETF Outflows
Even though there are technical problems, institutional adoption continues to underpin Bitcoin’s pricing structure. Exchange-traded funds and institutional investors now own more than 1.3 million BTC. US-based spot Bitcoin ETFs have $146 billion in net assets, which is 6.47% of BTC’s entire market capitalization.
But recent ETF flows tell a more complicated story. This week alone, spot Bitcoin ETFs have seen more than $645 million leave, after two weeks of inflows that totaled around $800 million. The change shows that institutional interest may be waning at these price levels, even though it is still strong.
Bitcoin Price Prediction: Critical Support at $108,600 Could Determine Next Move
Bitcoin will have to pass a big test at the Short-Term Holder Realized Price (STH RP) of $108,600, which is the average price of coins that have changed hands in the last 155 days. In the past, this level has been a solid support floor during bull markets, and it has stayed strong into 2024. The most recent test in April marked the cycle low at $76,000.
If Bitcoin can stay above the STH RP level, it might be able to start another bullish run toward past highs. But if this important support level breaks, it might start a further fall that could go as low as $98,200 to $100,000 or perhaps the April lows of $75,000.
Investors should keep a careful eye on the $108,600 support level and how ETFs are flowing to get an early idea of whether Bitcoin can stay at its present levels or if it will have to drop further more to get to the $100,000 psychological support zone.
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