Cryptocurrency analyst James Van Straten, in his new assessment of the Bitcoin price, drew attention to the first days of July. The analyst stated that he expects a new wave of decline in Bitcoin between July 1st and July 10th, and that the price could fall towards the realization price zone around $53,000.
According to Van Straten, the prevailing market expectation for Bitcoin is a “bottom of $40,000 in October.” However, the analyst argues that Bitcoin could price in the expected October bottom even sooner, noting that the crowd is often wrong about such predictions. Van Straten also pointed out that Bitcoin has already priced in its April 2024 halving event, suggesting a similar “pre-pricing” scenario could occur this time for the bottom formation.
The analyst also drew attention to Strategy’s capital structure. Van Straten noted that four of the company’s six convertible bonds, with a total nominal size of $3.2 billion, are still trading above their nominal value. This, he said, indicates that bond investors are pricing in a high probability of principal repayment, even though MSTR shares have fallen approximately 85 percent from their all-time high to trade around $85.
According to Van Straten, with the decline in MSTR shares, convertible bonds are now priced more like credit instruments than stock options. The analyst assessed that the market is pricing in a possible recovery in Bitcoin and MSTR in the future, or that Strategy may refinance its debts before maturity.
Therefore, Van Straten said that credit investors still see Strategy’s senior convertible bonds as “payable,” whereas equity investors are far more panicked. According to the analyst, while the company’s capital structure suggests that Strategy will maintain its solvency, the upside potential for common shares has significantly weakened.
*This is not investment advice.
