Bitcoin Price Analysis: BTC Stalls At $88,000, Is The Correction Really Over?
Bitcoin (BTC) is down nearly 1% during the ongoing session as its recovery stalled after briefly crossing $89,000. The flagship cryptocurrency has struggled to regain momentum after dropping to a low of $80,524 on Friday.
Analysts have warned of more liquidations, stating that a final leverage flush below $80,000 is possible.
Texas Buys $5M Worth Of IBIT
Texas has purchased $5 million worth of shares in BlackRock’s IBIT ETF, with another $5 million set aside for a self-custodied Bitcoin buy. The purchase was completed on November 20 and was announced by Lee Bratcher, President of the Texas Blockchain Council. Bratcher added that the government eventually plans to self-custody BTC. However, because it is still finalizing the process, the initial allocation was made with BlackRock’s IBIT.
“Texas has become the first state to purchase BTC with a $10 million investment on November 20, for $87,000.”
Bitcoin Bond Company CEO Pierre Rochard called the purchase significant, adding that it reflected a change in attitude towards BTC in a very short time.
“In five years, we went from ‘governments will ban BTC’ to ‘governments are only buying a small amount of BTC’. Hyperbitcoinization has happened, is happening, and will continue to happen.”
Strategy Stock Bleeds But Saylor Stays Firm
Strategy’s stock price has plummeted this year, prompting concerns that its Bitcoin bet is coming undone. According to Google Finance, Strategy (MSTR) stock is down nearly 60% over the past year, and 40% year-to-date. The stock went from $300 in October to $170 at the time of writing. While many say this is the unraveling of its Bitcoin bet, Strategy is sitting on double-digit profits on its Bitcoin buys, and its long-term equity performance has outpaced major tech stocks. According to data from BitcoinTreasuries.NET, Strategy acquired its Bitcoin at an average price of $74,430. Bitcoin is currently trading around $86,000, meaning it is still 16% up on its investment.
Strategy’s slump is largely due to how the biggest investors hedge their crypto exposure. BitMine Chair Tom Lee recently explained that Strategy has become the easiest way to hedge Bitcoin.
“Someone can use MicroStrategy’s options chain, which is so liquid, to hedge all of their crypto. The only convenient way to hedge someone’s long is to short MicroStrategy or buy puts.”
This has led to Strategy becoming an unintended pressure valve for the crypto market, absorbing hedges, shorts, and volatility, factors that may have very little to do with its Bitcoin strategy. Kyle Rodda, senior analyst at Capital.com, believes that there is a risk that a big drop in Bitcoin prices could force Strategy to liquidate its holdings, putting downward pressure on Strategy and Bitcoin.
“We are probably a long way from this. But the risk makes abundantly clear that in the long run, buying MSTR stock is potentially inferior to owning actual Bitcoin.”
Bitcoin (BTC) Price Analysis
Bitcoin (BTC) is on track to end November in the red, breaking a long-standing pattern of it being one of its strongest months of the year. The flagship cryptocurrency historically averages gains of around 40% in November, but is currently trading 20% below its monthly open. The performance has led analysts to question whether seasonal performances still matter, with October also failing to live up to market expectations. Bitfinex analysts have attributed BTC’s recent price action to overheated buying between $106,000 and $118,000, noting that many of those buyers were now capitulating at a loss.
Short-term BTC holders are also under pressure as BTC trades below its average cost basis, something which has happened only three times since early 2024.
Meanwhile, crypto analyst James Check warned that BTC investors could be in for more pain, arguing that more leverage could still be flushed out. Check described the market meltdown as a “2-sigma long liquidation event,” which wiped out a “chunk of degen gamblers. He cautioned that another flush could be on the cards, stating,
“Most of the leverage is gone, but the market has an incredible nose that can sniff out the final hold-outs. We wouldn’t be too surprised if we wick into the $70,000-$80,000 zone to flush the final leverage pockets.”
BTC started the previous weekend in bearish territory, dropping over 5% and settling at $94,503. It recovered on Saturday, rising 1.10% to $95,544, but was back in the red on Sunday, dropping 1.42% to $94,183. Sellers retained control on Monday, BTC fell 2.21% to $92,100. The flagship cryptocurrency fell to an intraday low of $89,183 on Tuesday. However, it recovered from this level to reclaim $92,000 and settle at $92,914, ultimately rising 0.88%. Selling pressure returned on Wednesday as BTC fell to a low of $88,483 before settling at $91,461.
Source: TradingView
Selling pressure intensified on Thursday as BTC fell over 5%, slipping below $90,000 and settling at $86,536. Bearish sentiment persisted on Friday as BTC plunged to an intraday low of $80,524 before rebounding to reclaim $85,000 and settle at $85,068. Price action was mixed over the weekend, with BTC falling 0.45% on Saturday before rising 2.51% on Sunday and settling at $86,808. Buyers retained control on Monday as BTC started the week in positive territory, rising 1.68% to $88,266. Selling pressure returned on Tuesday as the price fell 1.07% to $87,325. BTC is down nearly 1% during the ongoing session, trading around $87,325.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.