Is Wall Street’s $5.4B MSTR Dump Behind Bitcoin’s Price Plunge?

Key takeaways

• Institutional investors reduced their strategic exposure by $5.38 billion in the third quarter of 2025.

• MSTR is increasingly being used as a proxy hedging tool for Bitcoin, according to Tom Lee.

• Bitcoin is still in a downtrend.

U.S. institutional investors reduced their exposure to MicroStrategy (MSTR) by about $5.38 billion between the end of the second and third quarters of 2025, according to consolidated 13F filings.

This data comes as MSTR stock continues to decline alongside a decline in Bitcoin prices, with the market capitalization of MicroStrategy (now Strategy) falling below the value of the BTC it holds, earlier this month.

The filings show that the market value of institutional MSTR holdings fell from approximately $36.32 billion at the end of the second quarter to $30.94 billion by the end of the third quarter, marking a 14.8% decline.

The cuts included several major asset managers, including Capital International, BlackRock, Vanguard and Fidelity, each cutting nearly $1 billion.

Although Bitcoin trading is now down significantly, the pullback occurred during a relatively strong period for Bitcoin, with the asset trading at around $95,000.

So why have so many investors withdrawn from the world’s largest Bitcoin treasury?

Tom Lee, chairman of Bitmine Immersions, said in an interview with CNBC that he believes the pressure on MSTR may stem from the growing use of the stock as an alternative to hedge cryptocurrency risks.

“(The strategy) is probably the most important watch for stocks right now, because that is a proxy for Bitcoin, which is the most liquid name,” he told me last week.

With few effective ways to hedge losses directly in cryptocurrency markets, institutional traders are increasingly shorting the strategy, Lee explained.

“It seems to me that in the crypto world when they try to hedge their losses in Bitcoin and Ethereum, they can’t find any other way to hedge them except selling liquid stocks that the dealer trades,” he said.

He added that anyone with a “significant long position in Bitcoin” has “a very limited ability to hedge crypto derivatives.”

At the time of reporting, the strategy holds 649,870 BTC worth approximately $56 billion.

Wall Street’s sharp retreat from the strategy reflects a deeper shift in how institutions are exposed to Bitcoin.

For years, MSTR was a workaround For larger traditional players to benefit from Bitcoin indirectly when direct access is limited or unregulated.

With the new landscape and spot Bitcoin ETFs now widely available, traditional finance no longer needs to rely on the strategy as the primary Bitcoin proxy.

This shift is directly related to Tom Lee’s predictions, that the role of the strategy may turn into a hedging tool for the cryptocurrency market.

The same liquidity that made the strategy attractive as a gateway to Bitcoin may now make it a preferred target for hedging, especially in a bear market.

At the time of reporting, Bitcoin was trading near $86,000, down about 10% over the past week.

On Friday, CCN analyst Valdrin Taheri books Bitcoin’s sharp reversal “from its all-time high has 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 cryptocurrency market has fallen by 30% since its all-time highs in October.

Taheri He said on Monday That although the overall cryptocurrency industry is experiencing an “unlikely comeback” with a short-term rebound, the long-term trend “remains bearish.”

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