Is it too early to call the current risk phase anything other than a full-blown bear market?
Looking at the hard data, it makes more and more sense to compare this cycle to 2022, which remains the worst Bitcoin bear market ever, with BTC closing the year down over 65%.
That said, the third quarter could be the deciding factor, especially after the second quarter when BTC is already down more than 12%.
As the chart below shows, the stakes for the third quarter are high. Technically, Bitcoin has not had three consecutive bearish quarters since the 2022 cycle.
But after a 22% decline in the first quarter and a 12.2% decline in the second quarter, another negative third quarter would shift the economy from a cyclical downturn to something closer to a structural downturn.
Bitcoin Bears Gain Ground as Strategy Risks Increase
The entire value proposition of digital treasuries (DATs) really comes down to creating shareholder value.
The logic is simple: unlike holding Bitcoin or gold, where the upside is determined purely 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%.
That said, STRC appears to be ending the second quarter with its weakest cycle ever, down almost 25%. This has been accompanied by pressure on the MSTR, with the stock recently dipping below $85.50.
Strategy faces an unrealized loss of about $14 billion, while the 11.5% dividend equates to about $1.2 billion in annual payouts.
In other words, Strategy’s ability to maintain STRC’s dividend will now be a key test.
Against this backdrop, it is no surprise that STRC is under heavy selling pressure as shareholder value weakens. While Arkham Intelligence has ruled out a Terra-LUNA-style collapse, but the stock’s weakness still raises questions about Strategy’s ability to continue buying Bitcoin.
From a market perspective, the risk of deeper capitulation remains in play.
If that happens, BTC could easily end the third quarter in the red, putting it on track to post its first three consecutive bearish quarters since the 2022 bear market.
Final summary
- Bitcoin could post its first three consecutive bearish quarters since 2022 as selling pressure continues to mount.
- STRC’s sharp decline and Strategy’s growing unrealized Bitcoin losses raise concerns about the sustainability of the dividend and future Bitcoin purchases.