Market value wiped out by 600 billion in six weeks! Bitcoin's plunge tests Wall Street supporters, "large holders" have recently increased their purchases

Bitcoin is experiencing a fierce decline, even with support from Wall Street, policy backing, and an influx of institutional funds.

As of this Monday, the world's largest cryptocurrency has nearly erased all of its gains for the year. After breaking the $126,000 mark on October 6, setting a record high, its market value has evaporated by about $600 billion in six weeks. For a market that should have stabilized due to the mainstreaming process, the speed and intensity of this sell-off have exceeded expectations.

In this massive shock, the "big player" holding Bitcoin—Strategy Inc., formerly known as MicroStrategy, the world's largest Bitcoin treasury company—has increased its holdings against the trend. The company disclosed this Monday that it purchased $835.6 million worth of Bitcoin in the seven days ending last Sunday, marking the largest single-week purchase since July last year. This has increased its total Bitcoin holdings to 649,870 coins, with a total value of approximately $61.7 billion.

At least for now, Strategy's "bottom-fishing" has not boosted market sentiment. According to CoinMarketCap data, on Monday, the 17th, during the U.S. stock market's midday session, Bitcoin, which had initially fallen below $93,000 in Asian trading, dropped below $92,000, hitting a nearly seven-month low. This represents a decline of over $4,000, or more than 4%, from the day's high in European markets, and a drop of over $30,000, or approximately 27%, from the intraday record high set on October 6.

More concerning is that the company's market value has fallen to $59 billion, below the value of its Bitcoin holdings. This rare discount status indicates that the premium mechanism supporting its financing model has fallen into disrepair.

This decline tests not only retail investor confidence but also Wall Street's resolve regarding Bitcoin as a long-term asset allocation. With the outflow of ETF funds, leveraged liquidations, and a retreat in macro risk appetite, the market is undergoing a severe questioning of "when will Bitcoin fulfill its promises."

Sell-off Wave Hits: Market Confidence Rapidly Erodes

The sharp drop in Bitcoin occurred against a backdrop that should have been favorable. Wall Street is in place, exchange-traded funds (ETFs) are bringing cryptocurrencies into mainstream investment portfolios, and the Trump administration has fully embraced the crypto industry. However, the market quickly and violently retreated without any clear triggering factors.

Data compiled by Bloomberg shows that by this Monday, Bitcoin's total market value had shrunk by about $600 billion from its peak in October this year. Anxiety is spreading across trading desks and social media. Traders are digging up old charts, revisiting familiar theories, and searching for buyers.

Some of the losses reflect market fatigue and overreaction. Retail funds chasing crypto stocks at their peak have suffered heavy losses. In early October, an unexpected escalation in trade tensions triggered a wave of liquidations, while leverage was at its peak. The result is a market that is overhyped, lacking confidence, and too fragile, unable to catch the falling knife after the sentiment reversal Jake Kennis, an analyst at the cryptocurrency data platform Nansen, stated: "At this point, Bitcoin trading resembles a macro asset embedded in institutional portfolios, responding far more to liquidity, policy, and dollar dynamics than to expected mechanical supply shocks."

Despite ongoing discussions about institutionalization, the market still relies on emotional trading. Currently, sentiment is extremely poor. Risk appetite has reversed, and altcoins have plummeted significantly this year. Even the positive news from Trump has not spared cryptocurrencies from macroeconomic drag or competition from new speculative favorites like artificial intelligence, stablecoins, and prediction markets.

Wall Street's Confusion: Is the Four-Year Cycle Still Applicable?

In the absence of traditional Wall Street scripts guiding how Bitcoin should perform—without stable correlations and validated risk frameworks—some have reverted to their most familiar model: the four-year halving cycle.

This event refers to the design whereby Bitcoin's supply growth is halved every four years. Historically, it has stimulated speculative booms, followed by painful crashes, often with a certain lag, as miners—the operators of powerful computers supporting the network—tend to sell their holdings when prices drop.

In this cycle, the halving is set to occur in April 2024, followed by a price peak in October this year. This roughly aligns with the old rhythm. However, as financially strong buyers shape the market, it is no longer clear whether this script still applies.

Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, believes that prices will rise next year. He said, "The market sentiment among retail cryptocurrency investors is so poor that there may still be some downside potential. People are worried that the four-year cycle may repeat, and they don't want to experience a 50% pullback again. People are rushing to exit the market."

Eric Balchunas, an ETF analyst at Bloomberg Industry Research, believes that this may be the moment when traders' anxiety about historical repetition "causes the four-year cycle to occur." On the other hand, "the typical rhythm may be slightly disrupted or permanently altered."

Derek Lim, head of research at cryptocurrency market maker Caladan, stated that the Bitcoin bull markets of 2017 and 2021 were not merely the result of previous halving events but rather "a more powerful and fundamental driver: global liquidity." He added that as the U.S. government ends its shutdown, liquidity may return.

ETF Investors Face Challenges: Average Cost Line in Jeopardy

Bitcoin's decline has nearly erased all gains made this year, and if it continues to fall, the situation could worsen. This is because the token is in a dangerous zone, nearing levels where ordinary retail investors would face losses, a dynamic that could turn ETF fund flows from a previously stable tailwind into a fundamental downward force.

Bitcoin fell below $93,000 early Monday in the Asian market and has since hovered around the $94,000 mark, with losses expanding again by the end of the U.S. stock market. Bitcoin is far below the $100,000 level, which seemed to provide some integer support, and has significantly breached the 365-day moving average, putting the average investor who bought at any time over the past year in a losing position The next integer threshold is $90,000, which may also touch the key pain point for ETF buyers. Earlier this month, estimates showed that the mixed buy-in price for all historical fund inflows into U.S. spot Bitcoin ETFs was $89,600. This level may have fluctuated—especially considering the recent rapid outflows, with about $1.5 billion flowing out of crypto ETFs last week—but dropping to this price range is likely to exacerbate retail investors' negative sentiment towards Bitcoin and other virtual currencies.

According to data compiled by Bloomberg, investors withdrew $2.56 billion from cryptocurrency exchange-traded products over the past month, while increasing by $58.3 billion over the past year. The total assets of crypto ETPs amount to $184.5 billion.

Strategy Doubles Down: Financing Mechanism Under Test

Strategy, founded by Michael Saylor, bottomed out during last week's crypto market crash, doubling down on its pioneering digital asset treasury model. Strategy disclosed that it purchased $835.6 million worth of Bitcoin in the seven days ending last Sunday, marking the company's largest single purchase of the original cryptocurrency since July of last year.

According to a filing submitted to the U.S. Securities and Exchange Commission (SEC) on Monday, this brings its total holdings to 649,870 tokens, valued at approximately $61.7 billion. The company appears to have financed most of the purchases with proceeds from a euro-denominated preferred stock issuance completed last week.

However, Strategy's business model is facing challenges. The company relies on issuing stock and convertible bonds at a premium to purchase Bitcoin, and this financing mechanism fails when the market value falls below the value of its holdings. Strategy's mNAV—a key valuation metric comparing the company's market value to the value of its Bitcoin holdings—has plummeted from over 2.5 times to just 1.2 times. The premium that once made Strategy a high-beta proxy for Bitcoin has now thinned to the point where it cannot attract the same momentum chasers, weakening the cycle that once boosted it.

Last Friday, as Bitcoin's price fell below $95,000 and hit a six-month low, Strategy's stock price plummeted 32% over the past month. The company's market value dropped to $59 billion, while the value of its held Bitcoin reached $62.3 billion, meaning its mNAV fell to about 0.95 times, marking the first time in the company's history that its market value was lower than the value of its Bitcoin holdings.

Since the company announced its Bitcoin purchases starting in August 2020, its stock price has risen over 1500%. During the same period, the S&P 500 index has more than doubled. The stock has fallen about 57% since reaching an all-time high of $473.83 on November 20, 2024, and remained flat on Monday.

Saylor, co-founder and executive chairman of Strategy, refuted sell-off speculation triggered by on-chain data in a media interview, stating, "We are buying Bitcoin and will announce the next batch of purchases on Monday morning. I think people will be surprised. In fact, we have been accelerating our purchases."

Saylor initially financed the company's Bitcoin purchases by selling common stock. As investor concerns about dilution led to a narrowing of the common stock premium, the company later began issuing convertible bonds and eventually issued preferred stock It recently entered the European market to raise funds. Strategy completed the sale of €620 million (USD 716.8 million) in euro-denominated perpetual preferred shares last Thursday.

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, stated that as gold and stocks approach historical highs, Bitcoin is "the tip of the iceberg of risk assets, melting away." "I expect Bitcoin and most cryptocurrencies to continue to decline."