Bit Digital funded AI infrastructure company WhiteFiber by securing a $50 million loan from Galaxy Digital using 49,000 pledged LsETH tokens as collateral, avoiding the sale of its Ethereum holdings or issuing new shares.
A $20 billion AI hedge fund, Situational Awareness, gained 439% then lost 67% in July, selling most of its $16 billion public-stock portfolio. This collapse, driven by leverage and margin calls, warns that Bitcoin could be a primary asset sold by funds needing quick cash during market stress, even if unrelated to the initial losses.
Bitcoin's leverage gauges remained largely unaffected by the Bank of Japan's recent decision to hold interest rates, despite a significant increase in yen short positions. Hajime Takata's lone dissent for a 1.25% rate hike highlights a potential future pressure point for traders.
Strike has launched a new Bitcoin-backed loan product designed to eliminate margin calls and forced liquidations, even during significant price drops. However, it comes with a high 14% interest rate and requires timely payments to avoid liquidation.
Bitcoin-linked digital-credit products, designed for income, experienced significant volatility and price drops due to leveraged investors facing margin calls. Issuers like Strategy and Strive saw their preferred shares slide, highlighting risks in the nascent market.
