Market Pressure Intensifies
Bitcoin extended its decline on Friday, falling below $85,500 according to market data. The cryptocurrency has dropped more than 7% over the past day and over 20% in the last month. This downward movement comes as the market absorbs fresh selling pressure and adjusts to changing global rate expectations.
What’s interesting is how Bitcoin’s losses are outpacing traditional equities, which have held up relatively well thanks to strong earnings from companies like Nvidia. The divergence suggests something specific is happening in crypto markets rather than just broader economic concerns.
Supply Overwhelms Demand
Market maker FlowDesk noted in a Telegram update that the market continues to struggle with heavy coin supply hitting centralized exchanges. They’re seeing tens of thousands of coins moving from long-dormant Bitcoin wallets after years of inactivity.
These flows have simply overwhelmed the buying interest, keeping spot activity decisively skewed toward sellers. It’s creating a situation where the supply side is just too strong for current demand levels. FlowDesk also mentioned that managers are positioning defensively heading into year-end, more focused on protecting gains than adding exposure. This has thinned liquidity at key support levels, which probably isn’t helping the situation.
Derivatives Reflect Weakness
The weakness isn’t just in spot markets either. FlowDesk observed that derivatives flows mirror the spot market troubles, with large BTC and ETH buyers on the downside. Traders are rolling put positions lower to maintain protection as volatility curves remain heavily tilted toward puts.
Options data from Deribit shows a significant reversal in sentiment. The once-dominant $140,000 call has been eclipsed by the $85,000 put, which has become the largest open-interest strike in the entire BTC options market. Traders are clearly repositioning for further downside rather than anticipating new highs.
MicroStrategy Break-Even Watch
As the market continues its slide, attention is turning to MicroStrategy. Bitcoin’s price is approaching the company’s average break-even point of $74,430. That’s getting uncomfortably close given current price levels.
JPMorgan recently noted that MicroStrategy’s stock underperformance reflects growing anxiety over a possible removal from the MSCI index in January. Such a decision could trigger billions in passive outflows and add another layer of stress to an already fragile crypto market. It feels like we’re watching several potential pressure points develop simultaneously.
I think what we’re seeing is a combination of factors – dormant coins moving, defensive positioning, and broader market concerns all converging. The market structure does appear to be weakening as we head into year-end, though whether this is temporary or something more significant remains to be seen.
