Why is the price of Bitcoin crashing? Three main reasons behind the massive sell-off:

- Bitcoin's value dropped below $85,000 for the first time since April.
- The decline comes amid a range of macroeconomic and institutional factors, including uncertainty over Fed rate cuts and sales of BTC-type US Treasury bonds.
- The strategic BTC average cost of $74,000 could serve as the ultimate bottom for the top cryptocurrency.

Bitcoin (BTC) continued to fall due to three fundamental factors, including uncertainty about a December interest rate cut by the US Federal Reserve, increased selling from digital treasury assets (DATs), and growing concerns about the removal of Strategy from the MSCI index.

- Bitcoin's collapse raises concerns as prices drop below $85,000
Bitcoin maintained its decline below the $90,000 level, falling to $85,000 after a 2% decrease over the past 24 hours as of Friday's report publication. The leading cryptocurrency’s value dropped more than 20% in November alone, amid continued risk-off sentiment in high-risk assets.

The decline was exacerbated by the release of delayed US jobs data for September on Thursday, a key metric for the Federal Reserve's rate cut decisions.

The employment data then boosted expectations that the Fed might halt its recent path of easing interest rates at its December meeting, further weakening investor confidence in high-risk assets. This move triggered accelerated outflows from US spot Bitcoin exchange-traded funds (ETFs) on Thursday, totaling $903 million, led by BlackRock’s IBIT fund, which lost $355 million.

However, rate cut expectations jumped back above 70% on Friday after Fed officials John Williams and Steven Miran signaled they favored an easing path at the upcoming December meeting, providing short-term relief.

- Are Bitcoin Treasury Bonds a major player in the bearish trend?
The recent Bitcoin downturn was reinforced by digital currency trading firms selling top cryptocurrencies to conduct share buybacks. Most of their share prices have dropped below their net asset value (NAV), prompting them to sell assets to fill the gap.

At the same time, some institutional flows that were reported as long-term Bitcoin buys earlier in the year may not reflect clear bullish bets. With many DAT instruments trading at high premiums and market enthusiasm peaking earlier this year, most investors adopted a short-selling strategy, including short-selling (MSTR) and other DAT instruments, while holding Bitcoin via spot ETFs.

However, as many people exited their positions after recording massive gains—most notably short trader Jim Chanos—their actions put downward pressure on the leading cryptocurrency, according to a K33 report released Friday.

The strategy also increases market uncertainty, as it faces the prospect of being removed from the US MSCI index and many other major equity indices under newly proposed MSCI rules. JPMorgan analysts estimate the company could see $8.8 billion in outflows if it is removed from major equity indices.

On October 10, MSCI began reviewing proposals to remove companies from its indices whose digital asset holdings comprise 50% or more of their total assets—a threshold that Strategy far exceeds, given its balance sheet's heavy reliance on Bitcoin. This date coincided with a wave of liquidations in the crypto market on October 10, when the market saw $19 billion in liquidations.

In response to the potential removal from these indices, Michael Saylor, CEO of Strategy, stated in a post on X on Friday that the company should not be classified with funds, trusts, or holding companies. He emphasized that Strategy operates as a public software company with about $500 million in annual business revenues and relies on a treasury approach that treats Bitcoin as productive capital rather than a passive asset.

Saylor added that unlike investment funds, Strategy actively builds and manages products, describing the company as a "structurally financed company backed by Bitcoin" capable of innovating in capital markets and enterprise programs. He stressed that this operating model distinguishes the company from entities targeted by the proposed MSCI rules.

Despite Saylor's remarks, Bitcoin's price is about $10,000 below Strategy's average Bitcoin investment cost basis of $74,000. According to Andrei Dragos, Head of Research at Bitwise Europe, in a post published on "Winday X," the leading cryptocurrency could see a final bottom between Strategy’s average purchase price and BlackRock’s listed (IBIT) investment cost basis of $84,000.