Bitcoin seeing a brutal correction this week.
The crypto major plunging into its lowest level in nearly two years and holding below the 60,000 level, and that is a staggering 53% drop from its late 2025 peak.
Now the latest crashes flushing out over a billion dollars in liquidations as capital actively rotates out of crypto and into AI.
But there are also some real alarm bells that are ringing for the largest public.
Holder of Bitcoin, which is strategy.
The company's high yield preferred stock has crashed to a record 17.5% below par. while strategy marking its worst seven days stretch since November 2022.
So what should Michael Sailor actually be doing when it comes to Bitcoin as well as his company reserves while joining us to discuss the data behind the crash and also the risk to corporate treasuries this morning is head of research at crypto Julio Julio great to have you here.
Thank you so much.
Joining me while we are counting down the days until we kick off the second half of 2026.
But given the fact that we've seen a Bitcoin wiping out over a billion dollars in long liquidations and in the first half breaking below its 200 week moving average, does this massive capitulation actually signal a cyclical bottom, or are we in for a prolonged bear market here?
Where do you stand right now, Julio?
Thank you, thank you for having me.
Yes, I mean, we're still, you know, in a bear market, uh, closer to the bottom, uh, but still we don't see the demand conditions to, to bottom and to take us to a, to a new bull, bull run.
Um, we see the bottom around $53,000 which is where the average purchase price for folders, uh, sits.
So it's around that level that we would see to start forming the bottom, but mostly what we'd like to see is to, to see a, a, a growth in demand, which we haven't seen, uh, you know, since, um, since late last year.
Uh, we have still spot demand contracting, uh, falling by 198,000 Bitcoin on a 30-day basis, and we also see ETFs, you know, becoming net sellers this year.
Um, so net selling around 108,000 bitcoins and at the same, in the same period last year they were purchasing, um, near to that amount.
So, so yeah, we, we would want to see first, you know, the demand coming back to, to growth in order to, to bottom and then start a new, a new bold run.
Yes, and Julio, I do want to ask you about cryptoquant's flow metrics here because it's not just the price action that we're seeing across the crypto majors as well as the other tokens that we are indeed seeing this rotation out of institutional pools, out of crypto into AI chip as well as cloud stocks.
So give us an idea of what your data tells you about whether this capital flight is temporary or do you think there is a shift in risk appetite?
I mean, Bitcoin goes uh through cycles, right?
And so, in, in every cycle we see a demand wave of new capital entering into the market.
We can measure this on chain.
And what we saw in 2024, 2025 is this big demand waves uh of, of capital coming into Bitcoin with the ETF launch, the treasury companies, so a lot of new capital coming in, but as you know, in any, any Bitcoin cycle, there's only a finite amount of new capital coming and And then at the, at the end of 2025, we see this, this demand wave uh slowing down, um, sharply and now contracting.
So, so I think that uh we will see another wave of, of capital, but it will take uh, a few, a few months for, for the demand to turn around.
And I'm really glad you brought up the word cycle because when we take a look back at the latest bull market we did see some new trends emerge here and I understand that Cryptouant issued a high profile warning to strategy when it comes to their Bitcoin accumulation.
So walk us through what's happening with strategy right now and also tell us a little bit about some red flags that you may be seeing in their funding model.
Yeah, I mean, what's happened is that You know, one of the, uh, stretch, stretch, uh, the, the, uh, strategies stretch, uh, uh, preferred stock.
The fundamentals we see that it weakens, uh, by a large drawdown in strategies cash reserves, and, uh, also that drove the dividend coverage metrics to record lows.
So, Yeah, we, we see that uh they have less cash at the, at the start of the year um to, to, to fund the dividend obligations and also at the same time, uh, at the same time, the dividend obligations has um almost quadrupled from the start of the year, from $300 million to $1.2 billion on an analyzed basis.
So those two, those two, those two metrics, uh, we are really monitoring.
You know, the, the, the cash that they have on hand to serve dividend obligations and, and also, you know, how, how these dividend obligations increase because they, they issue, you know, stretch during this year to purchase Bitcoin and so, but that, every time they do that, their dividend obligations increase so it's, it's a, they have to have a, you know, a balance between that, between that issuance and then having the cash uh ready to, to serve those obligations.
Yeah, and finally, before I let you go, Julio, there are a lot of differing opinions as well as criticism of sailor's core playbook here.
But based on your research and expanding on what you just said, what specific data-driven timing models should the company be adopting to prevent further destroying shareholder value?
I mean, I would say that um they need to be more strategic when it comes to uh Bitcoin purchases.
Um, it seems that right, right now, the company, what it's doing is as long as they have capital, uh, they deploy it, uh, instantly to buy Bitcoin.
So we think that they can be more strategic about the timing that they do that.
Uh, for example, We knew since the late last year that we were entering into a bear market, so we would see prices, uh, a big drawdown in in Bitcoin prices.
So what I, what I would say they should be doing is not buying.
Buying in this bear market in the, or just buy in the late stages of the bear market, but they still bought at uh high levels during 2026 and so all those all those boys, they have now unrealized, unrealized losses there.
So just be a little bit more, more strategic about the timing and about, you know, observing the cycles, observing the, the metrics um that tells you a little bit of, you know, how, how to deploy the capital in a more uh strategic way.
Well, Julio, we will have to leave it there for today, but thank you so much for joining us on this Friday morning and thank you so much for sharing your insights as well as your perspective.
Thanks for having me.
