Bitcoin falls below $68,000 as bitcoin ETFs hit record losing streak

On Tuesday morning, bitcoin fell below the $68,000 level, dropping 5% in the past 24 hours. Shares of Strategy, which revealed on Monday it had sold 32 bitcoin, continue to drop as well. While it was a tiny portion of Strategy’s stash, the sale has further dampened sentiment around bitcoin.

Also weighing on the asset, bitcoin ETFs saw nearly half a billion dollars exit on the first day of June ($483.7 million), with BlackRock’s iShares Bitcoin Trust registering $440.3 million in outflows, according to SoSoValue. This marks the 11th consecutive day of outflows, the ETFs’ longest losing streak since inception.

Tim Sun, a senior researcher at HashKey, told Sherwood News that while bitcoin used to be primarily driven by crypto-native funds, leveraged capital, and retail sentiment, it is now increasingly priced by ETFs, public company balance sheets, institutional allocations, and macro trading capital.

“This means bitcoin has matured, but it also means it is now much more exposed to traditional financial variables,” Sun said.

Meanwhile, Strategy’s sale suggests founder Michael Saylor “is trying to desensitize the market to the idea of him selling bitcoin,” Nic Puckrin, cofounder of Coin Bureau, told Sherwood.

Alex Blume, founder and CEO of Two Prime, told Sherwood that “Strategy has to serve many masters,” and selling some de minimis amounts of bitcoin signals to STRC holders, indexes, and credit rating agencies that Saylor will sell bitcoin to service their debt obligations.

“At the same time, such a small amount aims to keep MSTR and BTC holders calm,” Blume said.

STRC, Strategy’s perpetual preferred equity instrument, has fallen below its $100 par value amid concerns the company’s cash reserve may cover only six more months of dividend payments.

John Nahas, chief business officer at Ava Labs, told Sherwood that while the pressure on Strategy is clearly intensifying, it would also be foolish to underestimate Saylor’s abilities.

Yet, Nahas argued that from the perspective of the preferred stock, the situation looks “difficult.”

“Trading at a discount is likely interpreted as market participants saying that they don’t think the dividend is as secure as it could be. There’s about $1.5 billion in annual dividend obligations associated with the $15 billion in outstanding preferred stock,” Nahas said.

On the other hand of the spectrum, some analysts view Strategy’s move as “immaterial” and remain bullish on the company. Lance Vitanza, TD Cowen analyst and managing director, said in a Monday note that Strategy “has not turned seller of bitcoin,” as the reduction represents 0.004% of its total holdings.

“In other words, the transaction was economically immaterial and does not alter the core accumulation thesis,” Vitanza said. TD has a “buy” rating on the company and a $400 price target, a 185% upside from its current price.

Mark Palmer, Benchmark’s managing director, told Sherwood he does not expect Strategy to use bitcoin sales as a primary means of funding dividends on STRC and its instruments. Rather, he said, it’s far more likely it will continue to replenish its cash reserve through equity issuance and use reserve funds to pay dividends.

“As such, we view today’s selloff in Strategy’s shares as a misread as the company’s modest sale of bitcoin was likely a one-off, and a well telegraphed one at that,” Palmer said.

As for Saylor? No word on the sale as of Tuesday morning. Instead, he posted on X twice about STRC, which he wants “to make the best credit instrument in the world.”

In the second post, he urged shareholders to vote in favor of semimonthly dividends rather than monthly dividends.