Bitcoin fell to an over two-month low on Wednesday, extending deep losses after a sale by top corporate holder Strategy presented largely bearish signals for the market.
Persistent concerns over the U.S.-Iran conflict, amid renewed military action between the two, also kept risk-driven appetite for broader crypto markets largely suppressed.
Bitcoin fell to as low as $65,389, its weakest level since late March. The world’s largest crypto recovered some ground to trade at $66,681.3 by 09:46 ET (13:46 GMT).
Strategy sale spooks Bitcoin, ETF outflows continue
Strategy Inc (NASDAQ:MSTR) on Monday disclosed it had sold 32 Bitcoins between May 26 and May 31 at an average price of $77,135 a coin– raising $2.5 million.
While the sale was a fraction of Strategy’s overall Bitcoin holdings, it still sent bearish signals to markets already on edge over fragile crypto prices.
Strategy shares tumbled to a near two-month low after the sale.
However, Citi analysts believe Strategy’s sale does not affect the fundamental backdrop for the world’s largest cryptocurrency.
"An announcement of small digital asset treasury selling has had an outsized effect on BTC in our view but does not alter the fundamental backdrop," they said in a note.
Citi maintained that ETF flows remain the primary driver of Bitcoin price appreciation, explaining roughly 45% of weekly return variation, and the best real-time gauge of new investor adoption. Recent flows have turned negative, however, and the bank expects sentiment to stay subdued.
We expect sentiment to remain lackluster, especially as the divergence with equity performance remains stark, absent positive news on the regulatory front or ’de-basement trade’ fears around fiscal positions," the analysts said.
Liquidity was also seen leaving crypto markets ahead of a bumper initial public offering from SpaceX, which is likely to take place next week.
Crypto was seen falling out of favor with investors as market focus shifted towards artificial intelligence stocks amid growing optimism over the fast-growing technology’s prospects.
This was also seen with Bitcoin exchange-traded funds seeing extended capital outflows after losing over $3 billion in the last three weeks.
Data from SoSoValue showed Bitcoin ETFs saw nearly $1 billion in outflows over Monday and Tuesday, marking a 12th consecutive day of outflows.
Crypto price today: altcoins sink amid BTC losses, Iran jitters
Broader crypto prices largely retreated, tracking losses in Bitcoin, with risk aversion also growing on continued hostilities between the U.S. and Iran.
World no.2 crypto Ether fell 5.7% to $1,862.55, while XRP fell 2.8% to $1.2268.
Solana, Cardano, and BNB fell between 3% and 7%. Among memecoins, Dogecoin fell 4.7%, while $TRUMP fell 3%.
The U.S. and Iran launched strikes against each other on Tuesday, their third such exchange over the past week.
The strikes came following reports that Iran had stepped back from indirect negotiations with the United States.
U.S. officials asserted that talks with Iran continued, and that a peace deal was close. But Iranian media reports showed Tehran had not engaged in any new dialogue with the U.S. this week.
Oil prices rose sharply this week, keeping markets on edge over the economic impact of the Iran war.
