Bitcoin slumped further yesterday to hit a new low since early 2024 at $72.8K.
The cryptocurrency is currently suffering from weak overall sentiment in the broader stock market amid the battle for the AI throne and tumbling liquidity. Futures traders are retreating further, and spot ETF flows remain unsustainable.
Meanwhile, the risk of a broader all-out war in the Middle East, combined with the anticipation of new economic data and corporate earnings, is keeping traders on edge.
The Wall Street Journal reports that advancing AI capabilities from OpenAI and Anthropic are causing an existential crisis for traditional software firms in legal and finance sectors. Investors are selling off shares as businesses move toward cheaper AI-generated alternatives, sparking significant fears of a tech bubble and widespread job displacement.
Also in stock market, corporate Bitcoin hoarding strategies are unravelling as prices fall below purchase averages, leaving firms like Michael Saylor’s Strategy with massive paper losses.
This shift from leveraged success to potential forced liquidation threatens a broader market crash as the model of buying tokens with debt becomes unsustainable.
The Financial Times argues that Michael Saylor’s Strategy has hit a strategic dead end at a $76,000 breakeven, turning its former growth loop into a cycle of dilution and debt. With no free cash flow from its core software business, the firm must choose between further shareholder dilution or struggling under debt unless Bitcoin prices see a major rally.
Rising US military mobilization in the Middle East has signalled a high risk of regional war, driving capital away from risk-on assets like crypto. Fears that ongoing negotiations are merely a strategic window for further military buildup rather than peace have added a significant risk premium to global markets, in my opinion.
All these risk factors are reflected in a further reduction in speculative liquidity. According to CoinGlass, crypto market futures open interest reached a new April 2025 low at $105.9B, a 55% decline from the all-time high recorded last year prior to the massive leverage reset cascading events. Multi-hundred-million-dollar long liquidations continue to hit traders with Bitcoin futures recording the sixth day in a row of over $100M in long liquidation.
Bitcoin spot ETFs face similar difficulty in maintaining sustained large inflows for long. After $561M of inflows on Monday, $272M in outflows were recorded yesterday according to SoSo Value data. That volatility might reinforce the speculative nature of the inflow into spot ETFs rather than indicating pure demand.
With speculative money escaping, on-chain hodlers seem to see the current downtrend as a potential dip to buy. Whale holdings are not declining severely as Bitcoin prices plummet. We are witnessing an overall divergence between the Bitcoin price and the number of whale addresses. According to BGeometrics data, the number of whale addresses holding 1K to 10K BTC dropped by 7 on a daily basis yesterday but went up by 25 from a month ago. At the same time, two new humpbacks who hold more than 10K BTC have arisen.
Simultaneously, the number of new addresses on the Bitcoin blockchain is ticking up significantly and marking a notable divergence to Bitcoin prices since late January. According to data from MacroMicro, the 7-day average of new addresses on the network rose from 285K on January 28th to 331K as of Monday, marking a 16% rise.
Looking at today, the market is anticipating ADP employment data, ISM Services PMI numbers, and Alphabet earnings after the stock market closes. Alphabet’s earnings might be extremely crucial this time for the broader market amid its rising dominance in the AI market, which can affect the direction of the stocks and crypto market to an extent eventually.
