Grayscale Research Director Zach Pandl said Bitcoin ($BTC) could enter a recovery phase in the coming months, but a lasting bottom requires new buyers to enter the market.
Pandl stated that Strategy’s announcement on June 1st that it had sold 32 $BTC triggered a new wave of volatility in the Bitcoin market. However, he added that the size of the sale alone was not significant, noting that the company still held approximately 840,000 $BTC on its balance sheet, an asset valued at around $55 billion. Nevertheless, he noted that the change in strategy by Strategy, considered one of the world’s largest digital asset holdings, put pressure on market sentiment.
According to Grayscale, the key factor to watch in recent price fluctuations has been the price movement of Strategy’s variable-rate preferred stock, STRC. Designed to remain at around $100 per share, STRC currently offers a dividend yield of 11.5%. A drop below $100 would indicate investor demand for higher returns.
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Pandl stated that Strategy could increase its dividend rate to meet investor demand, but this would raise future cash flow obligations and could lead to further Bitcoin sales. He noted that this could put additional pressure on the Bitcoin price, adding that the company’s leveraged business model is under pressure and increasing volatility in the Bitcoin market. Grayscale believes that at current STRC and MSTR price levels, Strategy’s capacity to continue accumulating Bitcoin is limited.
However, Grayscale believes that in the long term, a decrease in leverage levels in digital asset treasuries and a more diversified distribution of Bitcoin across institutional balance sheets will be positive for the health of the ecosystem. But the company added that for a sustainable bottom to form in the Bitcoin price, new buyers need to enter the market.
According to Grayscale, the Bitcoin price may recover in the coming months. However, in the short term, other cryptocurrency sectors that benefit more directly from regulatory clarity are likely to outperform Bitcoin.
*This is not investment advice.
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