Original Title: "Bitcoin Continues to Plummet, Is MSTR Forced to Sell the Focus?"
Original Author: Ye Zhen, Wallstreetcn
Bitcoin is undergoing a severe stress test for institutional holdings, as the price breaks through key psychological levels, approaching the cost lines of major holders like MicroStrategy. Market concerns about the liquidity of highly leveraged holders are rapidly intensifying.
Over the weekend, Bitcoin fell below the $80,000 mark, reaching its lowest level since April 7, 2025. This round of selling occurred against a backdrop of significantly insufficient market liquidity, further exacerbating Bitcoin's cumulative decline of over 30% in recent times.
Despite the gloomy market sentiment, MicroStrategy Executive Chairman Michael Saylor still posted an image with the words "More Orange" on social media platform X on Sunday, suggesting that the company will continue to increase its holdings. The company announced a 25 basis point increase in the dividend of its Series A perpetual preferred stock (STRC) to 11.25%, aiming to attract capital at high financing costs to maintain its Bitcoin purchasing strategy. However, analysts point out that if the price continues to stagnate or falls below its cost line, the high dividend payments could trigger severe cash flow pressures.
Bianco Research macro strategist Jim Bianco analyzed that the Bitcoin market is facing a crisis of narrative exhaustion. The current market structure exhibits highly institutional characteristics, with ETF investors and MicroStrategy collectively controlling about 10% of the circulating supply, and currently, they are all in a state of unrealized losses. This indicates that the narrative of "institutional entry," which once supported the market, may reverse into a significant source of selling pressure after being trapped at high levels.
Institutional Holdings in Unrealized Losses Intensify, ETF Experiences Net Outflow
Jim Bianco's analysis shows that Bitcoin is being highly "institutionalized," meaning that the market can now clearly observe the holding costs and profit and loss status of large funds. Currently, MicroStrategy and 11 spot Bitcoin ETFs collectively hold about 10% of the Bitcoin circulating supply, with a combined average purchase cost of approximately $85,360. At current prices, these institutional holdings are overall in an unrealized loss of about $8,000 per coin, with total unrealized losses reaching approximately $7 billion.
Among them, spot ETFs have become the core force affecting the supply-demand structure. Data shows that the 11 largest spot Bitcoin ETFs hold 1.29 million Bitcoins, accounting for 6.5% of the total circulating supply, with a market value of about $115 billion. However, the average purchase cost for these ETF investors is as high as $90,200, while the current price is about $13,000 lower than their cost.
This high-level buying structure has led to a typical pro-cyclical effect. Bianco pointed out that these ETFs have experienced net outflows for 10 consecutive trading days, with investors choosing to redeem during the pullback after buying at high levels, and this funding structure is amplifying the market's downward volatility.
MicroStrategy's Cushion Narrows, Aggressive Financing Raises Concerns
As a benchmark for corporate Bitcoin holdings, MicroStrategy's balance sheet is facing its most severe test in months. Currently, the company holds 712,647 Bitcoins, with an average cost of about $76,037. As Bitcoin's trading price falls back to around $78,000, the company's unrealized gains have significantly narrowed to less than 3%.
Despite the thinning cushion, MicroStrategy has shown no signs of retreat. To fund the next phase of purchases, the company adjusted the yield on its STRC product to 11.25%, a return rate that carries a significant premium compared to typical corporate bonds, reflecting the company's extreme thirst for capital and the inherent volatility risks of its Bitcoin-centric model. Data shows that since the STRC product debuted in November, the sales of this product alone have funded the acquisition of over 27,000 Bitcoins.
Analysts believe that MicroStrategy remains profitable, but its margin for error has clearly shrunk. If prices continue to fall, the company will face overall unrealized losses. Maintaining such high-cost dividend payments could lead to cash flow tightness, especially when Bitcoin prices fall below its cost "waterline" of $76,000, making this risk particularly acute.
Old Narratives Fail, Market Urgently Needs New Drivers
From a macro perspective, this plunge has intensified the disappointment in the market over the past few weeks. Jim Bianco believes that the real problem facing Bitcoin is the lack of new narratives. The previously highly anticipated "Boomer Adoption" story has been fully priced in and is even being falsified.
The current market structure shows that ETFs and MicroStrategy not only buy a lot and concentrate their holdings but are also currently all trapped. Bianco pointed out that as long as there is no new, sustainable buying narrative, the trend of capital outflows is likely to continue. In this case, what was once seen as a positive high-level institutional holding may instead turn into the largest source of pressure on the market. The current problem with Bitcoin is not whether anyone bought in the past, but where the next batch of buyers will come from at the current price level.
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