The flagship cryptocurrency has mounted a significant recovery following a volatile start to the week, characterized by severe price drops and widespread liquidations. While retail investors fled the market, major institutional players seized the opportunity to accumulate assets. However, emerging concerns from the stablecoin sector and a recent credit rating downgrade have tempered the bullish sentiment, raising questions about the sustainability of the rebound.

Institutional Giants Double Down

Contrary to the notion that large investors have been scared off by recent swings, data reveals that key institutions are actively buying the dip.

• MicroStrategy has further solidified its position as the world’s largest corporate Bitcoin holder, increasing its treasury to a staggering 650,000 BTC. The company has also established a $1.44 billion liquidity reserve, a strategic move designed to maintain operational flexibility during market stress and avoid forced asset sales.
• BlackRock continues to see robust institutional demand in Europe. The asset management giant issued 560,000 new shares for its iShares Bitcoin ETP on the London Stock Exchange (LSE) this week, a strong indicator of ongoing institutional accumulation.

Market Cleansing and a Potential Squeeze

After a brutal Monday that saw what analysts term a “leverage flush,” Bitcoin has clawed its way back above $91,000, recouping a portion of its steep losses. Estimates from Reuters and CoinDesk suggest long positions worth up to $1 billion were forcibly liquidated during the sell-off. While painful for leveraged traders, this event is viewed by some as having purged speculative excess from the market.

A notable shift is now visible in derivatives markets. On-chain metrics indicate that funding rates have turned negative for the first time in weeks. In this scenario, traders holding short positions are paying a premium to those holding longs. This dynamic often signals that selling pressure may be exhausted and can sometimes precede a “short squeeze,” a rapid price increase fueled by short sellers rushing to close their positions.

Should investors sell immediately? Or is it worth buying Bitcoin?

A Stablecoin Warning Clouds the Horizon

Not all developments are fueling optimism. A significant cautionary note was issued by ratings agency S&P Global, which downgraded its assessment of leading stablecoin Tether (USDT) to “weak.” The agency’s primary concern centers on Tether’s reserve composition, which now holds approximately 5.6% in Bitcoin.

S&P analysts warn that this concentration in a volatile asset represents an excessive risk, potentially challenging the stablecoin’s ability to maintain its 1:1 dollar peg during a severe market crisis. Although Tether CEO Paolo Ardoino has forcefully rejected this criticism, the downgrade introduces a new layer of systemic uncertainty into the cryptocurrency ecosystem.

Following a successful defense of crucial support levels around $80,000, Bitcoin appears to be in a phase of tentative consolidation. Short-term volatility, potentially exacerbated by the Tether debate, is likely to persist. Nevertheless, the accumulation patterns of major holders send a clear medium-term signal: the focus for large players remains squarely on building positions.

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