Institutional investors with exposure to Strategy (NASDAQ: MSTR) have raised the alarm over the fallout from the company’s decision to sell Bitcoin, sources told Congress.net on Tuesday.
According to the sources, major holders of MSTR securities are “deeply concerned” by how markets have responded, with fears mounting that “Strategy could be forced to sell more Bitcoin” and “inadvertently cause Bitcoin’s price and Strategy’s share price to repeatedly cascade down.”
The anxiety centres on a small but psychologically charged transaction. Strategy offloaded just 32 BTC this week, a fraction of its vast holdings, yet the move rattled confidence in a firm that has built its entire identity around accumulating the cryptocurrency. MSTR has now lost more than a fifth of its value this month alone, and sits roughly 70% below its peak from last year.
Bitcoin has done little to help matters, sliding nearly 6% in a single day and now trading well below the record high it set earlier this year.
Wall Street’s reaction has been split. TD Cowen analysts are standing by a bullish long-term outlook, while the broader investor base appears to be questioning whether Strategy’s leveraged Bitcoin model can hold up under sustained selling pressure.
The concern is self-reinforcing: a falling Bitcoin price squeezes Strategy’s balance sheet, which could necessitate further BTC sales, which in turn weighs on prices again.
The pain spread across the crypto equity space on Tuesday. Coinbase (COIN) posted its own significant decline, sitting deep in negative territory for the year and attracting a bearish price target from analysts at Compass Point. Ethereum treasury vehicles Sharplink (SBET) and BitMine Immersion Technologies (BMNR) both fell, as did Bitcoin miner CleanSpark (CLSK) and BTC services firm Fold (FLD).
For institutional holders who took on MSTR exposure expecting a clean proxy for Bitcoin upside, this week has underscored a more uncomfortable reality: the leverage that amplified gains on the way up now risks compounding losses on the way down.
