Is it too early to call the current risk-off phase anything other than a full-blown bear market?
Looking at hard data, it becomes increasingly meaningful to compare this cycle with 2022, which remains the worst Bitcoin bear market on record, with BTC ending the year down over 65%.
However, Q3 could be the deciding factor, especially after Q2. Bitcoin It has already fallen by over 12%.
As seen in the chart below, risks for the third quarter are high. Technically, Bitcoin has not had three consecutive downtrends since the 2022 cycle.
But after a decline of 22% in the first quarter and 12.2% in the second quarter, another negative third quarter will begin to shift this from a cyclical pullback to something closer to a structural downtrend.
Bitcoin bears gain ground as risks of strategy increase
The entire value proposition of digital treasuries (DATs) actually boils down to creating shareholder value.
The logic is simple: Unlike holding Bitcoin or gold, where upside is driven entirely by price appreciation, these DATs aim to generate value through things like share buybacks, dividends, and broader capital allocation strategies that actively return capital to shareholders.
STRC is no exception, with a dividend yield of 11.5%.
However, STRC looks set to end the second quarter with its weakest cycle on record, down nearly 25%. This comes with pressure on MSTR as the stock recently fell below $85.50.
The 11.5% dividend works out to about $1.2 billion in annual payments, while the strategy faces an unrealized loss of about $14 billion.
In other words, the strategy’s ability to sustain STRC’s dividend now becomes a key test.
In this environment, it is no surprise that STRC has come under heavy selling pressure as shareholder value weakens. During Arkham Intelligence While it rules out a Terra-LUNA-style crash, the stock’s weakness still raises questions about Strategy’s ability to continue buying Bitcoin.
From a market perspective, this leaves the risk of deeper capitulation in play.
In such a case, BTC could easily end the third quarter in the red and be on track to record its first three consecutive quarters of decline since the 2022 bear market.
Final Summary
- Bitcoin could experience its first three quarters of decline since 2022 as selling pressure continues to build.
- STRC’s sharp decline and the Strategy’s increasing unrealized Bitcoin losses raise concerns about dividend sustainability and future Bitcoin purchases.
