Fed threatening rate hikes while billions flee Bitcoin — short the crypto laggards
The new Fed chief is openly talking about raising interest rates, which is driving everyday investors to pull billions out of Bitcoin ETFs. With massive outflows and a major Bitcoin-focused company's stock in a death spiral, this is a perfect storm to bet against Bitcoin proxies.
Idea
Bitcoin is clinging to support near $60,000 primarily because investors are terrified of the Federal Reserve raising interest rates. With the new Fed chief, Kevin Warsh, explicitly stating that policymakers will decide on a rate hike at the next meeting, borrowing costs are likely to stay high, pushing investors away from risky assets like crypto. This fear is evidenced by a record $4.5 billion being pulled from Bitcoin ETFs in June. As a direct result, Strategy (formerly MicroStrategy), a company heavily exposed to Bitcoin, has lost 41% of its value and is heading for its eleventh down month. Combining Warsh's rate hike threats with the massive ETF bleeding makes a strong case for a continued downward spiral in Bitcoin proxies.
What happened since
| Symbol | Dir | T+1 | T+5 | T+20 |
|---|---|---|---|---|
| BTC | SHORT | +1.61% ✗ | +2.87% ✗ | — |
Price change since publication · updated Jul 11
Advanced analysis
With Strategy burning through cash and Bitcoin ETFs bleeding outflows, how much lower can this proxy go before something breaks?
With a 48.9 percent win rate and a 13.3 percent drawdown over five years, can this strategy survive a sharp Bitcoin relief rally driven by a dovish Fed pivot?
Key details
Community
News sources
- Strategy heads for eleventh losing month in twelve as bitcoin weakness continues — CoinDesk
- Fed's Warsh: Will decide on rate hike when policymakers 'shut the door' at next meeting - Reuters — Google News / Reuters
- Bitcoin clings to key support level as weekly US spot ETF outflows hit $1.8B and Fed rate hike bets mount: analysts — The Block