Bitcoin fell below the $60,000 mark on Wednesday, reaching its lowest point since October of last year.

The cryptocurrency market is once again confronting an issue largely overlooked over the past two years, as a major buyer faces pressure and retail interest wanes. The question arises: who will step in to support Bitcoin?

Data indicates Bitcoin dropped as much as 5.4% on Wednesday, hitting a low of $59,023, its weakest level since October 2024. After briefly dipping below $60,000 in early June, this renewed breach of a key psychological barrier has heightened concerns about the market's future trajectory.

Concurrently, shares of MicroStrategy Inc (NASDAQ: MSTR) declined for a sixth consecutive session, falling to their lowest level since February 2024. Market apprehension regarding its financing model is intensifying, with the yield on its preferred stock product, STRCP, climbing to approximately 14%.

Shiliang Tang, Managing Partner at Monarq Asset Management, noted that the market is reassessing the financing cycle model built around MicroStrategy's common and preferred stock.

According to CoinGlass data, nearly $8 billion in long cryptocurrency positions were liquidated over the past 24 hours. Furthermore, Deribit data shows a quarterly expiration of roughly $100 billion in Bitcoin options scheduled for this Friday, adding to short-term volatility risks.

In recent years, significant Bitcoin pullbacks have typically attracted retail investors seeking bargains, while MicroStrategy consistently funded Bitcoin purchases by issuing stock and preferred shares, becoming a major incremental buyer. Inflows into spot Bitcoin ETFs also provided crucial market support.

However, this dynamic is shifting. Analysts point out that many ETF investors who entered at higher Bitcoin prices are still holding unrealized losses, dampening their appetite for further purchases. Simultaneously, increasing amounts of retail capital are flowing into stronger-performing asset classes like AI-related stocks, reducing new sources of funding for the crypto market.

More significantly, the investment thesis of Bitcoin as an institutional portfolio asset is being challenged. During recent periods of heightened Middle East tensions and inflation concerns, Bitcoin has not demonstrated stable safe-haven properties. Instead, its price action has resembled that of a high-volatility risk asset, rather than the "digital gold" or portfolio hedge some institutions previously promoted.

Stephane Ouellette, CEO of FRNT Financial, stated that as market expectations for Federal Reserve rate cuts are pushed further out, Bitcoin's logic as an inflation hedge is being undermined.

Concerns about MicroStrategy's financing model persist. Although the company has recently resumed Bitcoin purchases, its growing book of unrealized losses as Bitcoin trades below some of its cost bases is raising doubts about its ability to sustain its previous pace of large-scale buying.

The recent sharp decline in its STRCP preferred stock has exacerbated investor anxiety. The stock fell to a low of $79.85 on Wednesday, a steep discount to its $100 face value. As this product is a key tool for MicroStrategy's Bitcoin acquisition financing, its price performance is viewed by many as a barometer for the sustainability of the company's financing capacity and Bitcoin accumulation strategy.

Sustained pressure on STRCP could limit MicroStrategy's future ability to fund Bitcoin purchases through preferred share issuance, thereby weakening its role as the crypto market's largest incremental buyer.

The cryptocurrency market's current reliance on MicroStrategy is significantly higher than in the past. Any changes to its financing capability or purchasing plans could have an outsized impact on market sentiment. This also indicates the Bitcoin market is becoming increasingly dependent on institutional capital support, precisely at a time when institutional confidence in this asset class is being tested.

Noelle Acheson, author of the "Crypto is Macro Now" newsletter, described the current Bitcoin market as having "many sellers, but fewer buyers." She noted that as the market loses both retail enthusiasm and incremental institutional funding, Bitcoin's future path may face greater uncertainty.