Is Wall Street’s $5.4B MSTR Dump Behind Bitcoin’s Price Plunge?
Key Takeaways
- Institutional investors slashed their Strategy exposure by $5.38 billion in Q3 2025.
- MSTR is increasingly being used as a proxy hedge for Bitcoin, according to Tom Lee.
- Bitcoin remains in a bearish trend.
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U.S. institutional investors cut their exposure to MicroStrategy (MSTR) by roughly $5.38 billion between the end of the second and third quarters of 2025, according to aggregated 13F filings.
The data comes as MSTR stock has continued to plummet alongside falling Bitcoin prices, with MicroStrategy’s (now Strategy’s) market cap dropping below the value of the BTC it holds, earlier this month.
Wall Street Pulls Back
Filings show that the market value of institutional MSTR holdings fell from about $36.32 billion at the end of Q2 to $30.94 billion by the close of Q3, marking a 14.8% decline.
The reductions spanned several major asset managers, including Capital International, BlackRock, Vanguard, and Fidelity, each cutting close to $1 billion.
Despite Bitcoin now trading significantly lower, the pullback occurred during a relatively strong period for BTC, with the asset trading around $95,000.
So why did so many investors pull out of the world’s largest Bitcoin treasury?
Has MSTR Become the Market’s Bitcoin Hedge?
Tom Lee, chairman of Bitmine Immersions, said in a CNBC interview that he believes pressure on MSTR may stem from the stock’s growing use as a proxy for hedging crypto risk.
“[Strategy] is probably the most important stock watch right now, because that is the Bitcoin proxy, it’s the most liquid name,” Lee said last week.
With few efficient ways to hedge losses directly in crypto markets, institutional traders are increasingly shorting Strategy, Lee explained.
“It seems to me that in the crypto world when they’re trying to hedge their loss in Bitcoin and Ethereum they can’t find any other way to hedge it except shorting the liquid stocks that it proxies,” he said.
He added that anyone with a “sizable Bitcoin long position” has “very limited ability to hedge it in crypto derivatives.”
At the time of reporting, Strategy holds 649,870 BTC worth roughly $56 billion.
Why Did Wall Street Dump MSTR?
Wall Street’s sharp retreat from Strategy reflects a deeper shift in how institutions gain exposure to Bitcoin.
For years, MSTR acted as a workaround for larger traditional players to tap into Bitcoin indirectly when direct access was limited or unregulated.
With a new landscape and spot Bitcoin ETFs now widely available, traditional finance no longer need to rely on Strategy as their primary Bitcoin proxy.
This shift directly connects to Tom Lee’s outlook, as Strategy’s role may be shifting into more of a hedging instrument for the crypto market.
The same liquidity that once made Strategy attractive as a Bitcoin gateway may now make it the go-to target for hedging, especially in a bearish market.
Bitcoin Remains Bearish
At the time of reporting, Bitcoin was trading near $86,000, down around 10% over the past week.
On Friday, CCN analyst Valdrin Tahiri wrote that Bitcoin’s sharp reversal “since the all-time high has all but confirmed that the price is in a bear market.”
“Until Bitcoin shows a clear reversal signal, traders should prepare for the possibility of new lows before any real recovery takes shape,” he wrote.
The crypto market has fallen by 30% since its October all-time highs.
Tahiri said on Monday that despite the overall crypto industry staging an “unlikely comeback” with a short-term rebound, the long-term trend “remains bearish.”
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