Is it still too early to call the current risk-off phase a full-blown bear market?
Looking at the hard data, it makes more and more sense to compare this cycle to 2022, which remains the worst Bitcoin bear market in history. $BTC It ended the year down more than 65%.
That said, the third quarter could be the deciding factor, especially after the second quarter. $BTC It’s already down more than 12%.
As the chart below shows, the stakes are higher in the third quarter. Technically speaking, Bitcoin has not recorded three consecutive bearish quarters since the 2022 cycle.
However, if we experience a drawdown of 22% in Q1, 12.2% in Q2, and then another negative turn in Q3, this will start to move from a cyclical reaction to something more like a structural downtrend.
Bitcoin bear market emerges as strategy risks increase
The entire value proposition of digital treasury (DAT) comes down to creating shareholder value.
The logic is simple. Unlike Bitcoin or gold holdings, whose appreciation is determined purely by price appreciation, these DATs aim to create value through things like share buybacks, dividends, and a broader capital allocation strategy that aggressively returns capital to shareholders.
STRC is no exception, with a dividend yield of 11.5%.
That being said, STRC is down nearly 25% and looks set to end the second quarter with its weakest cycle in history. This has also put pressure on MSTR, with the stock recently dropping below $85.50.
Strategy has about $14 billion in unrealized losses, but the 11.5% dividend equates to about $1.2 billion a year.
In other words, the key test will be whether Strategy can maintain STRC’s dividend.
Against this background, it is no surprise that STRC is facing significant selling pressure as shareholder value declines. Although Arkham Intelligence rules out the possibility of a Terra-LUNA-style crash, the weak stock price still casts doubt on the strategy’s ability to continue buying Bitcoin.
From a market perspective, this leaves the risk of deeper capitulation.
In that case, $BTC The third quarter could easily end in the red and be on track to record three consecutive bearish quarters for the first time since the 2022 bear market.
Final summary
- Bitcoin could record three consecutive quarters of bear market for the first time since 2022 as selling pressure continues to build.
- The sharp decline in STRC and the increase in Strategy’s unrealized losses on Bitcoin have raised concerns about the sustainability of dividends and future Bitcoin purchases.
