Bitcoin snapped back on Monday after a fresh disclosure that Strategy had sold bitcoin to raise cash rattled the market. A brief morning dip wiped out short bets across the crypto economy before buyers stepped in, and the coin still holds most of its early-July gains.
Bitcoin recovered above $63,500 on Monday, July 6, after a sudden morning slide pulled it to an intraday low of $61,246. The drop followed reports of yet another bitcoin sale by Strategy, but a relief rally erased nearly all the losses within hours.
A weekend rally cut short
The coin had built on its weekend gains after clearing $63,000 on Saturday, coming within a whisker of $64,000. Data from Bitstamp shows bitcoin peaked at $63,945 late Sunday before easing back below $63,000 by 7:50 a.m. EDT on Monday.
About 10 minutes later it changed hands at $61,934, and the selling pressure dragged it to the session low before buyers stepped in. At the time of writing bitcoin traded back above $63,500, a 24-hour gain of roughly 1.5%. Since July began, the cryptocurrency has added more than $4,000, or about 7%, lifting its market capitalization to $1.27 trillion.
The whipsaw hit traders on both sides of the short-selling trade. Across the crypto economy, $214 million in short bets were liquidated against $184 million in longs.
Why Strategy sold
Strategy sold 3,588 bitcoins for $216 million to fund dividend payments tied to its preferred stock, cutting its total holdings to 843,775 bitcoins. The company sold 1,363 bitcoin for $80.8 million between June 29 and June 30, then another 2,225 bitcoin for $135.2 million from July 1 through July 5. The disposal came a week after Strategy secured authorization to sell up to $1.25 billion in bitcoin to support its dollar reserve.
Critics called the move proof that the approach is a Ponzi scheme, while supporters framed it as a calculated push for S&P 500 inclusion and a better credit rating. For the first time, all five of Strategy's preferred stock dividends were funded by capital raised through a bitcoin sale.
Last October, S&P Global used the term “bitcoin stress” when it assigned Strategy a B-minus rating. With its dollar reserve now bolstered to $2.5 billion, bulls argue the company can monetize its holdings even through market volatility and is far from desperate for capital.
Sources: Bitcoin News, TradingView
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