Strategy Under Pressure Near $60,000
While Bitcoin sits near the $60,000 area, Strategy stays in the press and stays under pressure. That much is mechanical. The recent moves the company made, though, buy it enough time, and the investors who hold its equity and its preferred shares clearly liked what they saw. The stretch preferred product initially traded down to about $70 from its $100 par, then rallied back. The market has been supportive of these actions, which eases fears of any cascading round of liquidations. That is a positive development. It adds a measure of surety to the market.
There is a cost to it, though. These same actions can restrict Strategy's ability to acquire more Bitcoin in the second half of the year. If the company is trying to balance its cash reserves, and it is now trading at a lower mNAV multiple, its capacity to issue shares and buy Bitcoin in the back half gets constrained.
The reason behind the selling ties directly to defending the peg on the preferred product. The stated logic from Michael Saylor has been that selling can serve as a means to hold that level where it needs to be. This marks a real shift in the story. The company went from a "never sell Bitcoin" stance to a "strategically sell Bitcoin" stance, and some of the criticism aimed at that shift is fair. Look at how prices reacted, however. The dividend on that stretch preferred was recently raised to 12%, and the product has moved back toward its $100 peg. It may not necessarily get all the way there, but the market is reacting in a positive manner.
Narratives Move This Market
Bitcoin ticked higher recently off a high-profile endorsement, and that is classic Bitcoin. This is largely a momentum-driven market where narratives carry a lot of power. The president's comments about potentially including Bitcoin in Trump accounts landed as a positive. The cleanest way to read it: investors see one more type of potential buyer entering the picture. First came mainstream buyers through ETFs, and now the prospect of Trump accounts sits on top of that. Add almost any fuel to this fire and you tend to get a rally on most days.
The Correlation Puzzle
Bitcoin is fundamentally a non-correlated asset, and that trait stems from the halving every four years. No matter what happens in the global economy, the new supply of Bitcoin gets cut in half on that schedule. What matters on a short-term basis is what it happens to be tracking at any given moment, and that keeps changing. Just when you think you have figured out what Bitcoin is tethered to, it changes its mind the following week.
For the past few years it carried a high correlation to some tech stocks. That relationship has broken down. Tech stocks continue to do fine while Bitcoin has been floundering down around $60,000. Much of the time Bitcoin shows a negative correlation to the dollar, yet that correlation also broke down earlier in the year: the dollar was strengthening and Bitcoin was rising at the same time. Starting points matter here. Bitcoin had already fallen about 50% from its peak, so as the dollar rose and the conflict in Iran unfolded, Bitcoin rose alongside it. The rise was not caused by the dollar going up. The starting point simply set the stage.
The Yen and the Carry Trade
The pressing question sits with the yen at 40-year lows. In the classic carry trade, you sell the yen and buy a growth asset. The fear is that if the yen starts to rise, it can unravel that trade, which is the kind of dynamic seen earlier this year. In general, a rising yen probably counts as a negative for Bitcoin, though starting points matter again. Because this is ultimately a low-correlation asset, the more likely path runs through sentiment: a yen move could put some pressure on risk assets globally and pull investor sentiment down a bit. It is worth watching. It does not rise to a major risk in the near term.
Testing the Debasement Story
The debasement trade was a very big narrative last year, and it produced one of the sharper criticisms of Bitcoin. Gold saw a huge rally in the back half of last year while Bitcoin's market cap was cut in half, and the reading many people drew was blunt: Bitcoin clearly is not a store of value, and it is no longer being powered by the debasement trade.
There is a strong counter to that. Last year's gold rally looked more like a supply-constrained momentum trade than a pure fiscal-fear trade. Hedge funds were buying, central banks were buying as well, and people then assigned the debasement narrative onto that price action after the fact. This is not a defense of the government's fiscal health. The country does run a large budget deficit. Over the past few years, though, that deficit has actually come in from roughly 8 to 9% of GDP to about 5% today. Go back to 2010, which covers essentially Bitcoin's entire life, and the median budget deficit as a percent of nominal GDP has run about 5%, right where it sits now. None of that endorses the fiscal picture. It does put the narrative in perspective. Gold may have been rallying more for momentum than out of fundamental concern about the health of the US economy and its finances, and there was a fair amount of speculative trading inside that rally as well.
The through-line across all of it: Bitcoin remains a low-correlation, supply-driven asset whose price on any given week gets pushed hardest by whatever story the market has decided to believe.
