Gray scale: Bitcoin may enter a "recovery phase" in the coming months, but a sustainable bottom still requires support from new buying interest

BlockBeats message, June 5 — GrayScale Research Director Zach Pandl said in a post that after Strategy disclosed the sale of 32 BTC on June 1, it triggered a new round of volatility in the BTC market. He pointed out that the size of the sell-off itself is not the key issue, because Strategy still holds roughly 840,000 BTC on its balance sheet, worth about $55 billion; however, as one of the world’s largest digital asset treasuries, its strategic shift has put pressure on market sentiment.

Pandl believes it matters more how the recent volatility affects the price of Strategy’s variable-rate preferred stock instrument STRC. STRC is designed to be maintained at about $100 per share, and the current dividend yield is 11.5%. If the stock price falls below $100, that means investors are demanding a higher return. Strategy can increase dividends, but that would raise future cash flow obligations and may lead to more BTC being sold, further suppressing BTC prices. Strategy’s leveraged business model is under pressure and has increased volatility across the entire BTC market. At current levels of the STRC and MSTR share prices, GrayScale believes Strategy’s ability to continue accumulating more BTC is limited.

However, GrayScale believes that in the long run, reducing BTC on the balance sheet of the leveraged digital asset treasury and distributing more BTC across diversified corporate balance sheets will be beneficial for the health of the Bitcoin ecosystem. But before a sustainable bottom is formed in BTC price, other buyers need to step in. GrayScale expects BTC prices to recover in the coming months, but in the short term, BTC performance may lag behind other crypto market sectors that benefit more directly from regulatory clarity.