Bitcoin’s Extended Decline
Bitcoin continued its downward trend on Friday, falling below $85,500 according to market data. The cryptocurrency has now dropped more than 7% in the past day and over 20% during the last month. This decline appears more severe than what we’re seeing in traditional equities, which have held up better thanks to strong earnings from companies like Nvidia.
I think what’s happening here is that the market is dealing with some significant selling pressure. It’s not just regular trading activity – we’re seeing coins that have been sitting in wallets for years suddenly moving to exchanges. That’s creating a real imbalance in the market.
Market Structure Weakens
Market maker FlowDesk noted that there’s been a heavy supply of coins hitting centralized exchanges from long-dormant bitcoin wallets. We’re talking about tens of thousands of coins that haven’t moved in years suddenly becoming active. These flows have overwhelmed the buying interest, keeping spot activity decisively skewed toward sellers.
What’s interesting is that managers are now positioning defensively as we approach year-end. They seem more focused on protecting gains than adding exposure, which has thinned liquidity at key support levels. Perhaps this is just typical end-of-year behavior, but it does feel different this time.
Derivatives and Options Shift
The weakness isn’t just in spot markets either. FlowDesk observed that derivatives flows mirror the spot weakness, 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 pretty dramatic 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, which is quite a shift from the optimism we saw earlier this year.
MicroStrategy’s Break-Even Point
As the market continues its slide, attention is turning to MicroStrategy. Bitcoin’s price is edging toward the company’s average break-even point of $74,430. That’s getting uncomfortably close given current levels.
JPMorgan recently noted that the stock’s underperformance reflects mounting anxiety over a possible removal from the MSCI index in January. A decision like that could trigger billions in passive outflows and add another layer of stress to an already fragile crypto market. It feels like we’re seeing multiple pressure points converging at once.
The market structure does seem to be weakening as we head into year-end. Between the dormant wallet activity, defensive positioning, and these broader concerns about institutional exposure, there’s a lot for traders to consider right now.
