Bitcoin slides nearly 6% as Strategy slashes outlook, builds $1.44bn cash buffer; crypto stocks tumble
Bitcoin sank sharply in volatile trade, with sellers targeting key technical levels after Strategy—formerly MicroStrategy—shocked investors by cutting guidance and raising a fresh cash reserve to weather lower BTC prices. The move rattled crypto-linked equities and revived concerns over forced selling if volatility persists.
BTC drops as corporate catalyst hits sentiment
Bitcoin was last down 5.9% at $85,024, after hitting an intraday low of $83,814. The decline follows a recent cycle low on November 21 at $80,537, set after the October 6 all-time high near $126,272. The selloff accelerated when Strategy (formerly MicroStrategy) unveiled a more conservative outlook tied to a lower Bitcoin price path.
Strategy trims guidance, raises liquidity buffer
The company revised its full-year outlook to a range of $5.5 billion loss to $6.3 billion profit (or –$17 to +$19 per share), down from a prior forecast of a $24 billion profit ($80 per share), citing Bitcoin’s slide to the $84k area—well below the $150k year-end level embedded in earlier assumptions.
To stabilize funding, Strategy raised a $1.44 billion cash reserve designed to cover 12 months of preferred dividends and debt-interest payments, with plans to extend coverage to 24 months. The company holds 650,000 bitcoins valued around $54.8 billion at current prices.
Preferred securities have been under pressure as investors questioned whether the firm could maintain payouts without selling BTC. Strategy’s model—funding Bitcoin purchases via common stock, preferred stock, and convertible debt—faces greater scrutiny when prices trend lower.
Crypto equities wobble; liquidity, leverage in focus
Strategy’s shares (MSTR) fell 10.27% to $159.12 and are now down 45.10% year-to-date. The stock briefly tested a trendline linking the May and September 2024 lows, holding slightly above the session trough near $155.56.
Across markets, the tone skewed risk-off as traders reassessed leverage and liquidity across crypto and related equities. While broader FX spillovers were muted, the episode underscores how corporate balance-sheet exposure to BTC can amplify market swings. BPayNews notes sentiment remains fragile with cross-asset risk appetite sensitive to sudden changes in crypto volatility.
Technical picture: BTC back below key midpoint
Bitcoin has slipped below the 50% retracement of the August-to-October rally at $87,925, exposing the 61.8% level at $78,874. Additional support is seen in the $72,010–$74,588 region. A sustained break below the 61.8% retracement would likely invite momentum selling, while a recovery above $87,925 would ease immediate downside pressure.
Key points
- Bitcoin falls ~6% to $85,024; intraday low at $83,814.
- Strategy (formerly MicroStrategy) cuts guidance to $5.5bn loss to $6.3bn profit (EPS –$17 to +$19) from $24bn profit previously.
- Company establishes a $1.44bn cash reserve to cover 12 months of preferred dividends and interest, aiming for 24 months.
- Holds 650,000 BTC (~$54.8bn at current prices); preferreds pressured on funding concerns.
- MSTR down 10.27% to $159.12; –45.10% year-to-date.
- BTC trades below the $87,925 midpoint; watch $78,874 (61.8% retracement) and $72,010–$74,588 support band.
What traders are watching next
– Whether Strategy’s cash buffer calms concerns around preferred payouts and reduces perceived forced-selling risk.
– How BTC behaves around $78,874 and the $72k–$75k support zone.
– Cross-asset risk appetite: if crypto stress broadens, equity beta and high-beta FX could wobble.
FAQ
Why did Bitcoin drop today?
Bitcoin fell after Strategy (formerly MicroStrategy) slashed its earnings outlook and moved to bolster liquidity in response to lower BTC prices. The update heightened concerns about balance-sheet exposure to crypto and pressured crypto-linked equities, souring sentiment.
What exactly did Strategy announce?
The company guided full-year results to a range of a $5.5bn loss to $6.3bn profit (EPS –$17 to +$19), down from a previously expected $24bn profit ($80 EPS). It also set up a $1.44bn cash reserve to cover at least 12 months of preferred dividends and debt interest, with an aim to extend coverage to 24 months.
Does Strategy need to sell Bitcoin to fund its obligations?
Management created the new reserve specifically to cover near-term obligations without selling BTC. However, preferred securities remain under pressure as investors reassess funding durability if prices fall further.
How many bitcoins does Strategy hold?
The company holds 650,000 BTC, worth about $54.8bn at current market prices.
Which Bitcoin levels matter now?
Spot BTC is below the $87,925 midpoint of its recent rally. Key supports are the $78,874 61.8% retracement and a band near $72,010–$74,588. A recovery back above $87,925 would lessen immediate downside risk.
How did MSTR trade?
MSTR fell 10.27% to $159.12, briefly testing a trendline from the May and September 2024 lows and remaining down 45.10% year-to-date.
Could this spill over into FX or broader risk assets?
Direct FX impact tends to be limited, but pronounced crypto drawdowns can dampen risk appetite. If volatility persists and leverage is reduced across markets, high-beta equities and risk-sensitive currencies could face pressure. Traders are watching liquidity conditions and broader sentiment closely.
