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Bitcoin Suffers Its Steepest Weekly Decline Since November 2022
On Friday, 5 May, the price of Bitcoin fell by almost 5% in one day to $60,541, while weekly losses reached around 18%, the Financial Times reports. According to the publication, Bitcoin came close to its largest weekly loss since November 2022.
The sell-off began after Michael Saylor’s Strategy, the world’s largest corporate holder of Bitcoin, reported that it had sold 32 Bitcoin last week for a total of $2.5 million. This was the second sale since the company began buying tokens in August 2020. Before the sale, the company held 843,738 Bitcoin worth $64 billion. Strategy explained that the transaction was made to pay coupons to holders of preferred shares.
Upcoming Losses
Strategy’s reversal signals upcoming losses for Bitcoin holders, said Peter Schiff, a financial commentator and well-known cryptocurrency sceptic.
“It is not the small sale itself that matters, but the fact that it may turn out to be the first of many — and much larger ones,” he wrote on X.
Bitcoin and other cryptocurrencies are facing additional pressure as retail investors switch to the rally in technology stocks driven by the AI boom. In early February, Bitcoin fell to a 17-month low — just above $60,000, the FT notes.
This is significantly below the roughly $67,000 level where it stood on the eve of Donald Trump’s victory in the November 2024 US presidential election, when he promised to make the United States the “crypto capital of the world”. The price then rose by almost 90%, reaching a peak above $125,000 per token in October last year, before the decline began.
A Controversial Model
Saylor pioneered a business model in which a public company turns itself into a Bitcoin accumulation vehicle using borrowed funds, the newspaper notes. The model works while Bitcoin is rising, but comes under pressure when its price falls.
To finance purchases, the company raised funds through convertible bond offerings and other debt instruments. Over the past 10 months, Strategy raised $10.5 billion by selling perpetual preferred shares of the Stretch series with fixed annual dividends of 11.5%, not linked to share price movements. The latest Bitcoin sale was made specifically to service these payments, according to the SEC filing dated 31 May.
The only previous sale took place in December 2022 and was technical in nature. The package of transactions was structured to obtain a tax benefit.
Saylor, for his part, remains optimistic: on X, he called the decline in Bitcoin’s price an “opportunity”. From its February low, the price managed to rise by about 35% to its May peak, after which it began to fall again.
Retail Investors Have Left the Market
According to analysts, many retail traders have left the crypto market and switched to equities: the war with Iran and the excitement around AI triggered sharp movements in prices. Elon Musk’s SpaceX has launched what could potentially be the largest IPO in history, and AI laboratories Anthropic and OpenAI are expected to follow later this year.
“The retail investor has completely left the market,” said Jasper De Maere, strategist and trader at crypto trading firm Wintermute. “These investors are rotating back into equities.”
In addition, as the FT emphasises, digital asset legislation has stalled in the Senate because of opposition from US banks, despite months of behind-the-scenes negotiations.
See also: "Bitcoin Price Crashes Below $60,000"
