The continuous plunge of Bitcoin raises concerns about whether MSTR is forced to sell
MicroStrategy holds a total of 10% of the circulating supply across 11 spot ETFs, with an average cost as high as $85,360, currently facing an overall unrealized loss of about $7 billion. MicroStrategy's average cost is approximately $76,000, with a safety cushion narrowed to less than 3%, yet it still raised the preferred stock dividend to 11.25% to attract funds for continued coin purchases. Jim Bianco warned that the narrative of "old money entering the market" has failed, and in the absence of new buying, the high-positioned institutional holdings may turn into persistent selling pressure
Bitcoin is undergoing a severe stress test for institutional holdings, as the price has fallen below a key psychological threshold, approaching the cost line of major holders like MicroStrategy, leading to rising liquidity concerns for highly leveraged holders.
Over the weekend, Bitcoin broke through 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 recent cumulative decline of over 30%.
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 coin 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, the overall position is at a loss. This indicates that the narrative of "institutional entry" that once supported the market may reverse into a significant source of selling pressure after being trapped at high levels.
Institutional Holdings' Unrealized Losses Worsen, 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 at 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 and 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 approximately $115 billion. However, the average purchase cost for these ETF investors is as high as $90,200, while the current coin price is about $13,000 lower than their cost.
This high-level acquisition 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 safety 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 approximately $76,037. As the trading price of Bitcoin has fallen to around $78,000, the company's unrealized gains have significantly narrowed to less than 3%.
Despite the thinning safety cushion, MicroStrategy has shown no signs of retreat. To fund the next phase of purchases, the company has adjusted the yield of its STRC products 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 risk 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 narrowed. If prices continue to decline, 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 momentum
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 a new narrative. The previously highly anticipated "old money entering the market" (Boomer Adoption) story has been fully priced in and is even being falsified. The current market structure shows that both ETFs and MicroStrategy not only have significant purchases and concentrated holdings but are also currently overall in a loss position. Bianco pointed out that as long as there is no new, sustainable buying narrative, the trend of capital outflow is likely to continue. In this case, what was once seen as a favorable high-level institutional holding may instead become the largest source of pressure on the market. The current issue with Bitcoin is not whether someone has bought in the past, but rather where the next batch of buyers will come from at the current price level
