Institutional Bitcoin holdings fall 10%, treasury model strains

Institutional Bitcoin exposure has fallen about 10% since May, with combined holdings across trusts, ETFs and closed-end funds dropping from roughly 1.33 million BTC to 1.20 million BTC, according to on-chain analytics firm CryptoQuant. Analysts say corporate treasuries selling and weaker fund demand contributed to the decline.

CryptoQuant reported the three-month drop and flagged heavy selling by corporate treasuries as a factor. Data show that business intelligence software company Strategy, which holds the largest public corporate Bitcoin reserve, sold 1,638 BTC in the period described.

Analysts described how some companies that had been buying Bitcoin using equity or debt financing faced pressure when their market capitalizations fell below the value of their Bitcoin holdings. Novaque Research wrote that companies had amplified demand through a financing loop in which shares traded above the value of their Bitcoin, enabling further issuance to fund more Bitcoin purchases. The firm added that the loop weakens when market caps fall below net asset value because new financing can be dilutive.

CryptoQuant highlighted several public companies with shares trading at discounts to the Bitcoin they hold. For Strategy, a simple share-count valuation showed a small discount of 0.7 on a recent Thursday. When the company’s roughly $8 billion in debt and the liquidation preference on its preferred stock were included, the adjusted market net asset value, or mNAV, rose to 1.03, which removed the apparent discount.

The retreat in institutional holdings has coincided with a prolonged negative reading for the Coinbase Premium index, which measures the price difference between Coinbase and Binance BTC/USDT pairs. The index has remained below zero since the start of May, reaching 93 consecutive days of negative readings. Market participants view a return to a positive Coinbase Premium as linked to renewed U.S.-based institutional demand.

Web3 marketing firm FOUR posted that the negative premium does not necessarily reflect broad U.S. selling pressure and that muted U.S. institutional buying may reflect a demand shortage rather than aggressive selling.

Investment bank Citi pointed to ETF flows as an important driver of prices and reduced its Bitcoin price forecast to $53,000 through 2027, citing slower inflows than previously expected. CryptoQuant and other analysts said subdued ETF and fund demand, together with sales from some treasury holders, reduced the financing dynamics that had supported corporate Bitcoin purchases.

Background: Several public companies started holding Bitcoin as a corporate asset and in some cases used equity or debt markets to fund purchases. When markets priced those companies above the value of their Bitcoin, new issuances could be accretive. When stock prices trade below net asset value, issuing new shares can dilute existing shareholders and make additional Bitcoin purchases harder to finance.