Bitcoin has surged 27% over the past 30 days, hitting several subsequent all-time highs. After surpassing $100,000 last week, Bitcoin experienced its first “leverage flush” as traders took advantage of the milestone to adjust their positions.
Analysts noted that the dip was primarily caused by traders increasing leverage at the $100,000 level, giving bears an opportunity to reduce excessive speculative activity.
“Maybe, Bitcoin takes a small ‘holiday breather’ here, before the demand breaks through the $100K wall permanently,” analysts led by Gautam Chhugani said in a note.
The world’s largest crypto asset continues to see robust demand from exchange-traded funds (ETFs) and corporate treasury participants, with MicroStrategy Incorporated (NASDAQ:MSTR) leading the charge.
MicroStrategy, which has consistently raised equity and convertible debt to acquire Bitcoin, now holds over 2% of the total Bitcoin supply. Its convertible debt stands at approximately $7.3 billion, equivalent to around 18% of Bitcoin’s market value.
The convertible debt market for Bitcoin, pioneered by MicroStrategy, is gaining traction among other companies. Major Bitcoin miners such as Riot Platforms (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA) Holdings have begun issuing convertible debt to fund Bitcoin purchases.
Last week, MARA raised $1 billion in convertible debt at a 40% premium and a 0% coupon. Similarly, Riot announced a $500 million convertible debt issuance to buy Bitcoin.
“We believe, the convertible market for Bitcoin is just getting started,” analysts noted. “The leverage levels within miners and MSTR remains fairly low. Both RIOT and MARA have zero to negligible debt levels, as debt markets so far, have been shut for Bitcoin-focused companies.”
The firm added that most miners burdened by debt during the 2021-22 cycle have either exited the market or returned in stronger financial shape, with Core Scientific Inc (NASDAQ:CORZ) cited as one example.
Analysts believe these developments, combined with ongoing ETF demand, are creating consistent sources of Bitcoin buying that significantly exceed current supply levels.
Source: Cryptocurrency - investing.com
