Strategy skips bitcoin buy as XRP liquidation risk builds

Michael Saylor skipped the announcement of a weekly BTC purchase. Despite expectations of buying up to 1,600 BTC, the Executive Chairman of Strategy just sent out messages to calm the market. 

Michael Saylor’s Strategy did not make the usual BTC purchase announcement. Despite BTC hovering below $70,000, the company did not buy the dip. The previous week, Strategy acquired 1,142 BTC.

Instead, he mentioned one of Bitcoin’s main features, its non-stop trading. Despite this, the Year of the Horse celebrations put a damper on crypto activity and overall trading volumes. 

Strategy’s move was unexpected, as the company did not skip its BTC purchases, except for its quarterly report weeks. The skipped purchase arrived at a time of extreme market fear, as the Bitcoin fear and greed index is stuck at 12 points. 

Why did Strategy fail to buy more BTC?

Strategy was expected to buy more BTC based on its success with selling STRC preferred shares in the past week. 

Based on STRC’s preferred stocks traded in the $99-101 range, the Strategy was supposed to hold the equivalent of 1,459 BTC, a respectable weekly rise. The usage of STRC to raise funds also stops the MSTR common stock dilution, however briefly. 

On Monday, STRC returned below $100, meaning no new preferred shares were sold. For now, it remains uncertain if Strategy will announce a purchase by the end of the week, waiting out the market holidays in Asia, or its weekly raise will be used for cash reserves. For now, Strategy managed to calm the markets, while its MSTR common stock recovered to $133.

The chief concern for Strategy is that it will have to resort to depleting its cash reserves for dividends and to cover its loans maturing in 2028. The concerns may be moot in a bull market, but remain a threat if BTC crashes to a low price range.

Market downturn points to XRP liquidation risk 

The market slowdown during the Asian New Year celebrations may be the beginning of a more turbulent week. XRP open interest hovers just below $1B, mostly driven by rebuilding long positions. 

XRP may be one of the indicators, as the altcoin is among the most heavily shorted. Over $62M in liquidations are threatened if XRP falls to $1.44. The asset already hovered close to that range, at $1.49. 

XPR is seen as an indicator of overall market sentiment. The altcoin retains one of the highest mindshare levels on social media, but has not revisited a higher price range. According to researcher Rob Cunningham, Ripple still has the chance to establish itself as part of the banking payment infrastructure. 

Despite this, Standard Chartered lowered its XRP price forecast to $2.80 by the end of the year, down from a previous estimate of $8. 

Weakening altcoins are adding to BTC’s sentiment, once again raising the question of the depth of the bear market. Other leading altcoins like SOL, TRX, DOGE, and HYPE are also being predominantly shorted, with lower open interest.

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