Bitcoin Falls Below $85,000 Amid Market Uncertainty
Bitcoin (BTC) has dropped below $85,000 after falling 2% in the last 24 hours. The price is down over 20% this November. The drop comes amid uncertainty about a December rate cut by the US Federal Reserve (Fed). The delayed US jobs report for September strengthened bets that the Fed might pause rate cuts. This hurt investor confidence in risk assets, including Bitcoin.
On Thursday, US spot Bitcoin exchange-traded funds (ETFs) saw outflows totaling $903 million. BlackRock’s IBIT ETF led with $355 million withdrawn. However, rate cut expectations rose again on Friday after Fed officials John Williams and Stephen Miran hinted at possible easing in December. This brought short-term relief to the market.
Role of Bitcoin Treasuries in Price Drop
Another factor in Bitcoin’s decline is selling by digital asset treasuries (DATs). Many DATs need to sell Bitcoin to buy back their shares. Most DAT share prices have fallen below their net asset value (NAV), pushing these companies to sell assets.
Some institutional investors who held long Bitcoin positions earlier are now using complex strategies. They short companies like Strategy (MSTR) while holding spot Bitcoin ETFs. As some investors unwind these bets, their actions put more pressure on Bitcoin’s price.
Strategy’s Challenges and Market Impact
Strategy faces possible removal from the MSCI USA Index and other major stock benchmarks. MSCI introduced new rules on October 10 to remove companies with over 50% of assets in digital holdings. Strategy exceeds this threshold, mainly due to its Bitcoin-heavy balance sheet.
JPMorgan analysts estimate that Strategy could face $8.8 billion in outflows if removed from these indices. Strategy CEO Michael Saylor responded on X, saying the company should not be grouped with funds or trusts. He called Strategy a publicly traded software company with about $500 million in annual revenue. Saylor described their Bitcoin as productive capital, not a passive asset.
Despite Saylor’s statement, Bitcoin’s current price is about $10,000 below Strategy’s average buying price. Bitwise Europe research head André Dragosch said Bitcoin might find a bottom between Strategy’s average cost and BlackRock’s IBIT average cost of $84,000.
