Bitcoin briefly climbs to $58K as short-term holder pressure intensifies, while macroeconomic conditions spark market liquidations.

• Bitcoin briefly dropped to $58,000 as growing macro uncertainty and leveraged liquidations fueled heavy market selling pressure.
• The cost basis of short-term holders continued to deteriorate, pointing to weakening speculative demand for Bitcoin.
• Meanwhile, weakness in Strategy’s preferred stock, STRC, may limit the company’s ability to fund additional Bitcoin purchases if capital market conditions worsen.

Bitcoin briefly slid toward the $58,000 mark on Thursday as growing macroeconomic uncertainty, weakening confidence among short-term investors and heavy liquidations intensified selling pressure across the crypto market.

The downturn coincided with a sharp reversal in US equities that wiped nearly $1 trillion from the S&P 500, while Bitcoin touched the $58,000 level for the first time in 21 months.

Short-term holder sentiment continues to deteriorate

According to CryptoQuant, speculative demand in the market continues to weaken, with the Short-Term Holder (STH) Realized Price Year-on-Year Momentum falling further into negative territory.

The indicator has dropped from roughly -2.4% in mid-March to around -24% as of Tuesday, signaling that recent investors are buying Bitcoin at much lower price levels than they were a year ago.

CryptoQuant said the persistent decline points to fading participation from short-term traders, though the current reading remains less extreme than during previous bear-market reset phases, when the metric typically plunged 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 noted.

The firm added that although Bitcoin’s price may recover before the indicator turns positive again, there is still little evidence of a sustained rebound in short-term holder conviction.

Inflation concerns trigger broader market sell-off

The weak on-chain environment unfolded alongside a steep sell-off in traditional financial markets. The Kobeissi Letter linked the declines to renewed inflation fears and rising concerns over the escalating costs tied to artificial intelligence infrastructure.

Markets initially overlooked US Personal Consumption Expenditures (PCE) data showing inflation accelerated to 4.1% in May, its highest level since April 2023. However, sentiment deteriorated rapidly after Apple shares fell nearly 6% following the company’s announcement of higher product prices.

The broader risk-off mood spilled into crypto markets, where nearly $500 million worth of leveraged Bitcoin long positions were liquidated within about an hour, accelerating BTC’s drop toward $58,000.

STRC weakness clouds Strategy’s Bitcoin accumulation outlook

Meanwhile, Arkham Intelligence said growing concerns around Strategy’s STRC perpetual preferred shares added fresh uncertainty for Bitcoin investors.

The firm noted that STRC’s roughly 25% decline below its $100 par value reflects investor worries about Strategy’s ability to maintain its $1.2 billion annual dividend payments, rather than fears of an imminent collapse.

Unlike Terra’s algorithmic stablecoin model, STRC does not include a forced liquidation mechanism or mandatory dividend structure that could trigger a death spiral.

Still, Arkham warned that prolonged weakness in the preferred shares may make future fundraising more difficult, potentially slowing Strategy’s long-term Bitcoin accumulation plans if investor appetite continues to fade.

At the time of writing, Bitcoin was trading near $59,770, down almost 2% over the past 24 hours.