BeyOglu - The Analyst

Bitcoin's (BTC) decline has been sustained by three fundamental factors, including uncertainty around a December rate cut by the US Federal Reserve (Fed), increased selling from digital asset treasuries (DATs) and growing concerns over Strategy's removal from the MSCI.
Bitcoin's crash extends worries as prices drop below $85,000
Bitcoin has sustained its decline below the $90,000 zone, dropping to $85,000 after a 2% decline over the past 24 hours at the time of publication on Friday. The top crypto is down over 20% in November alone amid lingering risk-off sentiment across risk assets.
The decline was amplified by the release of the delayed US jobs data for September on Thursday, which is a major yardstick for the Federal Reserve's rate cut decisions.
The employment data, at the time, strengthened bets that the Fed may halt its recent rate-easing path at its December meeting, further weakening investor confidence in risk assets. The move accelerated outflows in US spot Bitcoin exchange-traded funds (ETFs) on Thursday, totalling $903 million, led by BlackRock's IBIT, which shed $355 million.
However, rate cut expectations jumped back above 70% on Friday after Fed officials John Williams and Stephen Miran signalled they would favour an easing path in the upcoming December meeting, providing a short-term relief.
Bitcoin treasuries are a key player in the downtrend
Bitcoin's recent downturn has also been reinforced by DATs' selling of the top crypto to conduct share buybacks. A majority of their share prices have plunged below their net asset value (NAV), prompting asset sales to close the gap.
At the same time, some institutional flows reported as long BTC positions earlier in the year may not reflect straightforward bullish bets. With several DATs trading at elevated premiums and market enthusiasm peaking earlier in the year, most investors adopted a long-short strategy, shorting Strategy (MSTR) and other DATs while holding Bitcoin through spot ETFs.
However, with many unwinding their bets after recording huge gains — the primary being short trader Jim Chanos — their operations have put downward pressure on the top crypto, K33 noted in a Friday report.
Strategy is also adding to the market uncertainty as it faces potential removal from the MSCI USA Index and several other major equity benchmarks under newly proposed MSCI rules. JPMorgan analysts estimate the company could see $8.8 billion in outflows if it is removed from major stock indices.
MSCI, on October 10, began reviewing proposals to remove companies from its indices whose digital-asset holdings make up 50% or more of their total assets, a threshold that Strategy exceeds by a wide margin due to its Bitcoin-heavy balance sheet. The date coincides with the October 10 leverage flush, where the crypto market saw $19 billion in liquidations.
In response to a potential removal from these indices, Strategy CEO Michael Saylor stated in an X post on Friday that the company should not be categorized alongside funds, trusts, or holding companies. He emphasized that Strategy operates as a publicly traded software firm with roughly $500 million in annual business revenue, complemented by a treasury approach that treats Bitcoin as productive capital rather than a passive asset.
Saylor added that, unlike vehicles that hold investments, Strategy actively builds and manages products, describing the firm as a "Bitcoin-backed structured finance company" capable of innovating across both capital markets and enterprise software. He argued that this operational model sets the company apart from entities targeted under MSCI's proposed rules.
Despite Saylor's comment, BTC is about $10,000 shy of the average $74,000 cost basis of Strategy's Bitcoin holdings. According to Bitwise Europe research head André Dragosch in a Wednesday X post, the top crypto could see a final bottom between Strategy's average purchase price and the $84,000 average cost basis for BlackRock's IBIT.

Bitcoin (BTC) failed to sustain the recovery driven by NVIDIA amid mixed US employment data and rapidly declining expectations for a Fed interest rate cut.
This caused Bitcoin to fall to $85,700, its lowest level since April.
As the declines continue to deepen day by day, JPMorgan and VanEck analysts also evaluated the recent declines.
What is the Main Reason for Bitcoin's Recent Drop?
In this context, JPMorgan said that the crypto correction continues due to outflows in spot Bitcoin and Ethereum ETFs.
According to The Block, JPMorgan analysts analyzed that the current decline in Bitcoin is caused by the selling of individual investors in spot ETFs.
JPMorgan analysts led by Nikolaos Panigirtzoglou noted that retail investors have sold nearly $4 billion worth of spot Bitcoin and Ethereum ETFs so far in November.
This has been the main driver of the recent cryptocurrency correction.
Bank analysts noted that the large liquidations seen in October have stabilized, but the market correction continues due to retail ETF selling.
“Cryptocurrency investors were responsible for the crypto market correction in October through heavy deleveraging in perpetual futures. However, this previous deleveraging in perpetual futures appears to have stabilized in November.
In the November decline, non-crypto investors, mostly individual investors who used spot Bitcoin and Ethereum, stood out.
Retail ETF investors appear to be largely responsible for the continued correction experienced in the crypto market in November.”
Analysts recently added that a total of $4 billion has flowed from spot BTC and ETH ETFs since the beginning of November, making this the largest outflow since February.
Will Bitcoin Recover?
Apart from JPMorgan analysts, VanEck analysts also evaluated the decline and said that medium-term investors were leading the BTC sales.
According to VanEck analysts, recent sales were primarily made by mid-term holders, not long-term investors.
Analysts noted that addresses holding BTC over the past five years accounted for most of the recent sales, while long-term holders have largely remained inactive despite deteriorating market sentiment.
VanEck also noted that the BTC balance in wallets that have held BTC for three to five years has fallen by 32% in the last two years, indicating a rotation among investors rather than investor capitulation.
Analysts also noted that open interest in BTC perpetual futures has fallen by 20% since October 9, with funding rates falling to bear market levels.
VanEck consequently predicted that these factors (the HODL strategy of long-term investors, investor rotation, and the capitalization of futures traders) have put BTC in a “reset” state, which could be followed by a recovery.
*This is not investment advice.