Bitcoin drops to $64.5K as selling worries resurface

Bitcoin fell to $64,500 on Bitstamp before recovering modestly into Wednesday’s Wall Street open, leaving the price below the $66,000 level. The decline came hours before the Federal Reserve’s policy meeting, scheduled for 2 p.m. Eastern.

Traders pointed to two primary factors for the weakness: the upcoming FOMC decision and renewed concern that technology company Strategy could sell additional bitcoin to raise cash for dividend payments. Trading data showed the pair hit the $64,500 level and then edged higher during early U.S. trading.

QCP Capital wrote in a Market Color note: “While broader markets continue to trade higher on optimism across multiple fronts, BTC remains stuck below the 66k level.” The firm added that the underperformance “has been driven in part by concerns that Strategy may need to sell more Bitcoin to fund dividend payments, especially after buying back $1.5 billion of its 2029 Convertible Senior Notes.”

QCP noted Strategy sold 32 BTC in May and has taken other steps, including share issuance, that extended its liquidity runway. The firm said the selling overhang could continue until Strategy lengthens its funding runway further.

Data from the CME Group’s FedWatch Tool showed no probability assigned to a rate cut at this meeting and market pricing has shifted toward a possible rate hike later in the year. Andre Dragosch, European head of research at Bitwise, wrote that uncertainty remains over whether Kevin Warsh will lean hawkish or dovish with inflation rising.

Analysts expect Warsh to address inflation trends and political pressure on rate policy in his first meeting as Fed chair. Market participants said they will watch the Fed statement, Warsh’s remarks and any disclosures from Strategy for signals on monetary policy and the company’s financing plans.

Broader risk markets displayed gains, while bitcoin lagged amid the specific concern over potential corporate sales.