Recent Bitcoin from Strategy (MSTR) The sale has had a huge impact on market sentiment, but Wall Street bank Citi does not see the move as changing the company’s long-term strategy.
The bank said the sale was anticipated after Strategy signaled plans to unload certain tax-disadvantaged bitcoin holdings during its first-quarter earnings call as part of a portfolio optimization effort.
“Recent flows have been negative and the chances of passage of a US market structure bill (a potential catalyst for renewed investor interest in our view) are diminishing,” analyst Alex Saunders wrote in Tuesday’s report.
Markets were rocked this week after Strategy disclosed selling a small portion of its bitcoin holdings, marking a rare departure from Chief Executive Michael Saylor’s traditional “buy and hold” approach.
While the company said the transaction was tied to tax planning considerations, the move raised concerns that one of bitcoin’s most influential corporate sponsors could become a seller, contributing to a bout of weakness in BTC and renewed scrutiny of the digital asset treasury model.
Saunders continues to see spot bitcoin exchange-traded fund (ETF) flows as the main driver of BTC prices, estimating that they account for around 45% of the weekly performance change. The analyst said recent ETF flows have turned negative, highlighting a broader lack of investor demand for the cryptocurrency.
While digital asset treasury companies have become major buyers of bitcoin, the analyst does not believe treasury-related sales are a major factor behind the recent weakness. Instead, the bank argued that ETF flows remain the clearest high-frequency measure of investor adoption and appetite.
The report also warned that the chances of a US crypto market structure bill being passed this year appear to be declining, reducing the likelihood of a near-term catalyst for new investor inflows.
Combined with bitcoin’s underperformance relative to stocks, fading legislative prospects are likely to keep sentiment muted in the absence of regulatory progress or renewed concerns about fiscal sustainability, the report added.
The disclosure of Strategy’s first bitcoin sale in years dented sentiment this week, fueling concerns about potential sales by digital asset treasury firms and pushing BTC lower. The world’s largest cryptocurrency was trading around $67,200 at the time of this publication.
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