Key Points
- Bitcoin fell 3.4%, retreating from its record high of $108,000. The decline reflects traders’ reduction of risk related to year-end and holidays.
- MicroStrategy announced plans to expand its Bitcoin buying program, holding over $40 billion in Bitcoin.
- The company purchased $561 million in Bitcoin this week, marking its seventh consecutive week of acquisitions.
- Bitcoin has risen 130% in 2024, surpassing traditional investments. Friday’s record $43 billion in crypto derivatives expiries could increase market volatility.
Bitcoin experienced its first decline in three days, dropping by as much as 3.4% to $95,110 in New York on Thursday. This retreat comes after the cryptocurrency hit an all-time high of over $108,000 on December 17, marking a significant pullback as traders reduce risk exposure ahead of the year’s end. A broader index of cryptocurrencies, including Ethereum, Solana, and Dogecoin, also saw a decline of approximately 3.5%.
According to Zaheer Ebtikar, founder of crypto fund Split Capital, the dip reflects a combination of year-end and holiday-related derisking. The $100,000 level is a psychological barrier for institutional investors seeking to lock in gains.
The decline in Bitcoin’s value came despite bullish news from MicroStrategy Inc., the largest corporate holder of Bitcoin, which announced plans to expand its Bitcoin buying program. The company, which holds over $40 billion in Bitcoin, revealed in a filing with the U.S. Securities and Exchange Commission its intent to increase the number of authorized shares of Class A common stock and preferred stock. This move aims to bolster its financial capacity to purchase more Bitcoin, reinforcing its pivot from a software company to a leading cryptocurrency investor.
Earlier this week, MicroStrategy reported a $561 million Bitcoin purchase at an average price close to last week’s record highs, marking the seventh consecutive week of acquisitions. Market analysts, including Sean McNulty of Arbelos Markets, credit MicroStrategy’s consistent buying activity as a primary driver of Bitcoin’s rally throughout the year.
Bitcoin’s impressive 130% rise in 2024 has outperformed traditional investments such as global stocks and gold, yet the market faces potential turbulence. On Friday, derivatives exchange Deribit will see a record $43 billion in open interest expire, including $13.95 billion in Bitcoin options and $3.77 billion in Ether options. Analysts warn that these expiries could result in heightened market volatility, with market makers potentially unwinding hedges and shorting Bitcoin, creating choppy trading conditions to close the year.
