Bitcoin Dips Below Strategy’s Breakeven, Sparking Market Fears

Bitcoin dropped as low as $74,500 early Monday morning, briefly falling below the average purchase price of $76,052 that Strategy, the largest corporate holder of the cryptocurrency, paid for its coins. This marked the first time the price went under that key level since the company started buying in 2020. The move came amid a sharp sell-off that wiped out $250 billion from the global crypto market over two days, driven by heavy selling, liquidations, and fears over delayed interest rate cuts.

Background

Bitcoin has had a rough start to the year. It is down nearly 14% since January 1, while stocks like the S&P 500 and Nasdaq have held up better or even gained slightly. Gold hit record highs, but Bitcoin did not follow. The price first broke below $80,000 over the weekend, a level not seen since April 2025. By early Monday, it plunged further, hitting $74,500 before pulling back a bit.

This sell-off followed a period of high prices late last year. Traders had bet on quick interest rate cuts from the Federal Reserve, but signs point to delays. A former Fed official seen as tough on rates, Kevin Warsh, emerged as a possible pick for Fed chair, adding to the pressure. Global markets felt the hit, but crypto took the hardest blow.

The market's makeup played a big role. Futures and derivatives trading now dominate over simple spot buys and sells. Many traders use borrowed money, so when prices drop, automatic sales kick in to cover losses. This created a chain reaction once $75,000 gave way. Liquidations piled up, speeding the fall.

Strategy stands out in this story. The company holds over 712,000 bitcoins, bought steadily since August 2020. At $76,052 average cost, Monday's dip put those holdings underwater for the first time. Even big players, called whales, saw paper losses.

Key Details

The price action was fast and brutal. Bitcoin fell more than 4% in a single day, with a 16% drop over five straight sessions. It tapped $74,998 around midday before stabilizing near $75,000. In some markets, like South Korea, it neared local lows of 110 million won.

Trader Warnings on Further Drops

Veteran trader Peter Brandt looked at the charts and saw trouble. He pointed to a breakdown from a rising pattern on the daily chart. Bitcoin lost support at $78,000 to $80,000 and now sits below its short-term moving averages.

"The daily Bitcoin chart is showing a decisive structural breakdown rather than a routine pullback." – Peter Brandt

Brandt sees risks down to $66,500 first, then $54,000 if the slide continues. He says bounces will stay short unless the price closes above $83,500 to $85,000 daily.

Other factors fed the decline. A U.S. government shutdown talk added uncertainty, though it may not last. Derivatives overwhelmed spot trading, leading to forced sales. Bitcoin often leads the crypto pack, so its drop pulled altcoins down too.

Strategy's situation drew extra eyes. With bitcoin under its cost basis, some worry the firm might sell to cut losses. That could flood the market and push prices to $30,000 or $40,000 in a worst case. But others think the company will hold, letting prices steady at $75,000.

What This Means

For Strategy, the dip means real pressure. Its holdings are now in loss territory, a shift after years of gains. The company has not commented on plans to sell, but the market watches closely. A sale from such a big holder could deepen the rout.

Broader crypto feels the pain too. The $250 billion market cap loss hit everyone. Smaller coins fell harder as fear spread. Investor mood turned sour, with less buying and more caution.

Traders now eye key levels. Holding above $75,000 could signal a pause. A break lower opens doors to $66,500 or worse. Upside needs a push past $80,000, then $83,500 to shift the mood.

Volatility looks set to stay. No clear buy signal exists yet. Rate cut hopes linger, but delays keep selling alive. Bitcoin's role as the market bellwether means its moves set the tone for all crypto.

Big holders like Strategy face tests. If they stand firm, it could calm nerves. Whales slipping red adds to the unease, but history shows crypto bounces from deep dips. The next days will show if this is a short correction or start of something bigger.

Markets stabilized a touch Monday afternoon, with bitcoin near $75,000. But the damage from the week lingers. One of the worst January closes in years sets a low bar for February. Traders brace for more swings as these forces play out.