Bitfinex Recognizes Strategy as Key Driver Behind Bitcoin Rally

Bitcoin has surged above Strategy’s average acquisition cost of $75,385 following a nearly 24% increase last week, marking the company’s upcoming treasury decision as a crucial test for the ongoing rally, as noted by Bitfinex analysts.

Analysts from Bitfinex informed crypto.news that Strategy’s treasury actions have become a vital indicator following the company’s cessation of Bitcoin sales just before BTC surged out of its summer trading range.

As the largest publicly acknowledged corporate holder of Bitcoin, Strategy had previously sold BTC over several weeks to fulfill obligations related to its preferred securities. Subsequently, the company reported no purchases or sales for the week ending August 16, effectively removing a source of supply as Bitcoin geared up to cross above its established range.

The resulting price movement has now lifted BTC above Strategy’s average acquisition cost for the first time since the company’s recent sales commenced. The remaining 840,447 BTC were acquired for approximately $63.36 billion, including fees and expenses, at an average price of $75,385 each.

According to Bitfinex, a return to accumulation would bolster the rally by generating additional corporate spot demand. Conversely, renewed sales at elevated prices could introduce new supply into the market, complicating the potential for sustained gains.

Strategy has remained on the sidelines after raising $2B

Recent disclosures reveal that Strategy had yet another inactive week in the Bitcoin market, even as BTC traded above its average purchase price.

As previously reported by crypto.news, Strategy sold about 18.26 million MSTR shares between August 17 and August 23, generating close to $2 billion via its at-the-market offering program. During this timeframe, the company made no Bitcoin purchases or sales, keeping its holdings steady at 840,447 BTC.

The majority of the proceeds were held in cash. Strategy moved $300 million into its existing U.S. dollar reserve, allocated around $1.59 billion to a new cash account, and spent $136.4 million to repurchase approximately 1.43 million shares of its STRC perpetual preferred stock.

These transactions boosted the firm’s dollar reserve to $5.1 billion and raised its total cash position, including the new account, to $6.69 billion. A week prior, Strategy had reported a reserve of about $4.8 billion, a figure cited in the Bitfinex report.

By opting to raise cash without reinvesting in Bitcoin, Strategy has yet to provide the positive spot signal highlighted by Bitfinex. Their filing also indicated that the firm refrained from capitalizing on BTC’s latest surge, thereby avoiding the potential overhead pressure identified by analysts.

Earlier actions, however, painted a different picture. From August 3 to August 9, Strategy sold 1,690 BTC for $108.6 million at an average price of $64,262, using the proceeds to repurchase about 1.15 million STRC shares.

In the week prior, the company also sold another 1,638 BTC, bringing in approximately $104.7 million. The proceeds from that sale funded $52.4 million in STRC dividends and around $52.3 million in preferred-stock repurchases.

Bitcoin needs a $73,500 retest to confirm the recovery

With Strategy’s latest filing showing no activity, Bitfinex analysts have placed greater significance on Bitcoin’s cost-basis metrics and the quality of demand propelling the breakout.

“The upcoming weeks will produce two clear signals,” the analysts stated, highlighting $73,500 as the average purchase price for investors who acquired BTC over the preceding three to six months.

The report indicated that a weekly close above this level followed by a successful retest would affirm that Bitcoin has indeed emerged from its summer trading range. Maintaining this price zone would also ensure that recent buyers remain profitable, thus reducing the likelihood of immediate selling as prices return to their cost basis.

The next critical resistance point lies near $86,500, where Bitfinex noted that investors who purchased Bitcoin between 18 months and two years ago would hit their average break-even price. Selling pressure from holders eager to exit at cost could make this level a significant source of resistance.

On the downside, the analysts identified $64,500 as the average cost for the most recent buyer group. A dip below this level would indicate that Bitcoin’s breakout may have surged too far due to forced purchases, shifting focus back to the previous summer range, according to Bitfinex.

The rally has propelled Bitcoin from below $64,000 on August 19 to a three-month high near $79,550. The substantial 24% weekly gain marked its most significant advance since March 2023, successfully reclaiming resistance levels around $65,000, $67,000, $70,000, and $73,500.

ETF demand must replace forced Bitcoin buying

Bitfinex characterized U.S. spot Bitcoin ETFs and publicly traded companies with BTC on their balance sheets as the primary sources of sustainable demand in the market. The analysts referred to these entities as the “Two-Complex Spot Bid,” emphasizing that this framework focuses on capital entering and remaining in the market rather than coins simply changing hands between traders.

In the week ending August 21, U.S. spot Bitcoin ETFs attracted about $1.9 billion in net inflows, including five consecutive days of inflows. This demand provides evidence that regulated funds were actively purchasing alongside traders forced to liquidate bearish positions.

Despite this, forced buying was still a significant factor in accelerating the rally’s pace. As Bitcoin breached the $70,000 mark, a record wave of short-liquidation wiped out nearly $2.7 billion in bearish crypto positions within 24 hours, according to data from CoinGlass cited by market analysts.

Short sellers are compelled to buy back an asset to close out liquidated positions, which can further accelerate a rally as prices climb. However, Bitfinex cautioned that this effect ceases once the impacted positions are cleared, making ongoing gains reliant on new buyers in the spot market.

Participation on the onchain level has not yet provided clear confirmation. According to the report, Bitcoin transactions across the network remain at near eight-year lows, suggesting limited engagement from holders, even with the price rise.

U.S. investors now face both BTC and MSTR signals

For investors in the U.S., Strategy introduces an additional market signal, as its common shares are traded on Nasdaq under the MSTR ticker, while spot Bitcoin ETFs offer direct regulated exposure to BTC pricing.

Strategy sources parts of its capital structure through U.S. securities markets, which include common-stock issuance and various preferred securities. Weekly Form 8-K disclosures provided to the U.S. Securities and Exchange Commission enable investors to monitor Bitcoin transactions, equity sales, cash allocations, and preferred-stock repurchases.

Under a capital framework established in June, Strategy’s board approved a BTC Monetization Program, allowing for up to $1.25 billion in Bitcoin sales to support its dollar reserve. The structure also includes separate authorizations for a $1 billion repurchase of both common and preferred securities, as well as provisions for dividend and interest payments.

With a new cash account holding $1.59 billion, Strategy’s management gains another outlet for liquidity. As indicated in the August 24 filing, these funds may be allocated toward Bitcoin purchases, preferred dividends, debt obligations, or securities repurchases, although no specific commitments or timelines for fund deployment were disclosed.