Bitcoin briefly hits $58K as short-term holder weakness deepens, macro conditions trigger liquidations

• ​Bitcoin briefly fell to $58,000 as macro uncertainty and leveraged liquidations intensified market selling.
• Short-term holders' cost basis weakened further, signaling fading speculative participation in Bitcoin.
• Strategy's preferred stock, STRC, weakness could hinder future Bitcoin purchases if capital-raising conditions deteriorate.

Bitcoin fell briefly toward the $58,000 level on Thursday as mounting macroeconomic uncertainty, weakening short-term investor conviction and widespread liquidations intensified selling pressure across crypto.

The decline came amid a sharp reversal in US equities, erasing roughly $1 trillion from the S&P 500, while Bitcoin briefly touched $58,000 for the first time in 21 months.

Short-term holder momentum continues to weaken

CryptoQuant stated that the market continues to show signs of weakening speculative demand, with the Short-Term Holder (STH) Realized Price Year-on-Year Momentum falling deeper into negative territory.

The metric has declined from around -2.4% in mid-March to approximately -24% as of Tuesday, suggesting that recent buyers are entering the market at significantly lower price levels than a year ago.

CryptoQuant noted that the continued deterioration reflects fading participation from short-term traders, although the current reading remains less severe compared to previous bear-market reset periods, when the metric typically fell between -55% and -65%.

“These levels coincided with periods of severe short-term holder cost-basis reset, after which market conditions eventually improved,” CryptoQuant analyst Zizcrypto wrote.

While Bitcoin's price could begin to recover before the indicator reverses, the firm said the metric has yet to show evidence of a sustained improvement in short-term holder conviction.

Inflation fears spark market-wide sell-off amid Bitcoin decline

The weak onchain backdrop coincided with a dramatic sell-off across traditional financial markets. The Kobeissi Letter attributed the declines to renewed inflation fears and concerns surrounding the rising costs of artificial intelligence infrastructure.

Markets initially shrugged off US Personal Consumption Expenditures (PCE) data showing inflation accelerated to 4.1% in May, the highest level since April 2023.  However, the event was followed by a sharp dip in equities, with Apple stock dropping nearly 6% after it announced an increase in product prices.

The broader risk-off move spilled over into digital assets, where approximately $500 million in leveraged Bitcoin long positions were liquidated in about an hour, accelerating Bitcoin's decline toward $58,000.

STRC weakness pressures Strategy's funding outlook

On the other hand, Arkham Intelligence highlighted that growing concerns surrounding Strategy's STRC perpetual preferred shares added another layer of uncertainty for Bitcoin investors.

The firm noted that STRC's roughly 25% decline below its $100 par value reflects investor concerns over Strategy's ability to sustain its $1.2 billion annual dividend payments rather than an imminent collapse.

Unlike Terra's algorithmic stablecoin model, STRC has no forced liquidation mechanism or mandatory dividend obligation that could trigger a death spiral.

Arkham warned that prolonged weakness in the preferred shares could make future capital raises more difficult. Such conditions could slow Strategy's Bitcoin accumulation strategy over the long term if investor appetite continues to weaken.

Bitcoin is trading at $59,770, down nearly 2% in the past 24 hours at the time of writing.