Bitcoin's price drop below the psychological level of US$60,000 has once again sparked concerns among investors, recalling the crypto market's massive collapse in 2022 when Bitcoin lost more than 70% of its value. Digital Currency
This time, the market is once again facing a combination of pressure from institutional factors and changing investor sentiment.
At the time of writing, Bitcoin is at $59,208, up 0.04% since it opened early Friday in Asian trading.
The level was previously considered a key support zone, but its failure to hold opened the door to greater selling pressure.
The decline comes as the market begins to question the ability of Strategy Inc., a company led by Michael Saylor, to continue its aggressive Bitcoin buying strategy.
Strategy has been one of the main drivers of Bitcoin demand by raising capital through the issuance of common and preferred shares to finance the purchase of the digital asset.
However, the fall in Bitcoin prices has left the company with billions of dollars in unrealized losses, raising questions about whether its financing model is sustainable.
Meanwhile, Strategy's preferred stock yield, which has risen to around 14 percent, also reflects the rising cost of financing.
The market is also under pressure from a decline in retail investors who are now seen as more likely to shift capital to artificial intelligence (AI)-related stocks, reducing new fund flows into the crypto market.
At the same time, institutional investors are also seen as increasingly cautious after Bitcoin failed to perform as a hedge asset amid rising geopolitical tensions and inflation concerns.
According to CoinGlass data, nearly $800 million in long positions in the crypto market were liquidated in the past 24 hours.
This situation has added to selling pressure as the system automatically closes investors' positions following the price drop.
The market is also preparing for the expiration of around $10 billion worth of Bitcoin options contracts, which is expected to increase price volatility in the near term.
Analysts believe that the combination of weak demand, pressure on Strategy and uncertainty over US interest rate policy has the potential to continue to influence Bitcoin's direction.
If negative sentiment continues, the market may face a deeper correction phase before investor confidence recovers.
