Bitcoin (BTC), Middle East Crisis to MicroStrategy (MSTR)...Weekend Volatility 'Super Alert'

▲ Bitcoin (BTC), decline, bear market/ChatGPT generated image

The cryptocurrency market is once again in the midst of weekend volatility, as concerns about failed US-Iran negotiations and fears of Bitcoin (BTC) sell-offs from MicroStrategy (MSTR) overlap.

Lark Davis, host of the cryptocurrency podcast The Lark Davis Show, identified the cancellation of US-Iran talks in Switzerland and the potential closure of the Strait of Hormuz as the market's primary sources of anxiety in his June 19 (local time) episode. He even cited unconfirmed reports that Iranian Revolutionary Guard Corps vessels had fired warning shots at ships passing through the strait. He explained that since the US stock market is closed, the 24-hour cryptocurrency market might be the first to absorb geopolitical shocks.

Oil price instability was also presented as a burden on risk assets. Davis reported that Donald Trump stated that strategic oil reserves are being rapidly depleted, and if Middle East tensions do not ease, oil prices could rise significantly within weeks. He believed that if Israel-Iran related tensions do not de-escalate over the weekend, stocks and cryptocurrencies could both be impacted when financial markets open on Monday.

Another factor contributing to Bitcoin's weakness is the sharp decline in MicroStrategy preferred stock STRC. Davis explained that STRC was designed to target the $100 level but fell to $83 the previous day. He saw that market fears that MicroStrategy might sell Bitcoin to reduce its dividend burden were shaking the market. Jeff Dorman suggested a 70% probability that MicroStrategy would continue selling small amounts of stock in its traditional manner, and a 25% probability that it would buy time by selling $3-4 billion worth of Bitcoin.

The chart trend also leaned bearish. Davis said that Bitcoin had broken below a bear flag, and its technical target could open up to $59,000. He explained that BlackRock's spot Bitcoin ETF saw $90 million withdrawn the previous day and $82 million the day before that. While $10 million flowed in on the 16th, $64 million was withdrawn on the 15th, indicating that a recovery in ETF buying pressure has not yet been confirmed.

However, he did not believe the market had completely collapsed. Charles Edwards analyzed that Bitcoin is in a deeply undervalued zone, representing 5% of its history over the past decade. Davis said that if the US cryptocurrency market structure bill passes in July, it could be a strong catalyst for a rebound. Ethereum (ETH) also saw its social mention ratio fall to 8.48% and its weekly Relative Strength Index (RSI) approach historical lows, but he noted that in the past, major rebounds have started from such periods of disinterest. He emphasized that the fundamental strength of the cryptocurrency industry is maintained, citing the continued fee revenue from major protocols like Hyperliquid, Polymarket, and Uniswap.

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