Wall Street Divests $5.4 Billion From MSTR - World's Largest Bitcoin Treasury

Wall Street in the third quarter

In a decisive shift that underscores the changing structure of institutional Bitcoin investment, Wall Street institutions withdrew $5.4 billion from MicroStrategy (MSTR) in Q3 2025, according to new disclosures reported by CryptoSlate.

The decline, noted in a recent SEC 13F filing, shows that the total value of MSTR held by institutional investors fell from $36.32 billion to $30.94 billion, representing a 14.8% decline in just one quarter.

Importantly, this was not accompanied by a drop in MSTR's stock price — signaling that this was not a panic sell-off, but rather a strategic shift driven by structural changes in how institutions approach Bitcoin.

$5.38 Billion Cut From MicroStrategy Bitcoin

The wave of institutional divestment from MSTR, now rebranded as Strategy, was muted in Q3, with total investment falling 14.8% to $30.94 billion despite Bitcoin remaining stable around $95,000 — a far cry from the 2021 scarcity-driven premium that propelled MSTR to become a proxy for BTC. Leading the charge were:

• Vanguard: Down $950 million, largest decline, reflecting index fund managers shifting to unleveraged BTC via IBIT.

• BlackRock: Down $920 million, which is quite ironic considering IBIT achieved $33 billion in the same category.

• Fidelity: Down $880 million, matching FBTC's $20 billion inflow as direct investment levels outpace representations.

• Capital International: Cut $850 million, citing "overvaluation at 107 times sales".

This $5.38 billion reduction—equivalent to 14.8% of Q2 holdings—marks a structural change rather than a downturn: MSTR’s market capitalization fell below its $56 billion BTC reserves earlier this month, highlighting the proxy’s diminishing leverage advantage following the ETF’s launch.

ETFs overshadow MSTR's leverage appeal

MSTR's 2021-2024 miracle — leveraged BTC investing via convertible bonds and equity financing — has delivered 500% returns, but spot ETFs like BlackRock's IBIT (0.25% fee, $33 billion in assets under management) offer direct, unleveraged access without MSTR's 107x revenue multiple or software revenue dilution (currently under 10% of valuation).

Institutions managing $100 trillion in total assets under management currently allocate 1-2% to BTC directly, eliminating mandates amid a 40% drop in MSTR from its peak of $250 by 2025, according to Cambridge Associates. MSCI's possible reclassification of MSTR as a "digital asset vehicle" threatens to wipe out the index, triggering $2.8-$8.8 billion in passive fund turnover - another blow to the mandate coffin.

However, MSTR still exists with $31 billion in institutional backing, a P/E of 381x that reflects Saylor's steadfast BTC vision.

Evaluation and Conclusion

The $5.4 billion drop in MSTR holdings is not a rejection of Bitcoin, but a shift to higher quality exposure mechanisms.

MicroStrategy's model is showing its age, especially as ETFs dominate. Institutional de-risking is temporary; the structural preference for spot ETFs is permanent.

Bitcoin is still the core asset — the only change is where institutions choose to hold it. The real story isn't about the decline of MSTR — it's about Bitcoin becoming fully financialized.

Disclaimer: The information presented in this article is the author's personal opinion in the cryptocurrency field. It is not intended to be financial or investment advice. Any investment decision should be based on careful consideration of your personal portfolio and risk tolerance. The views expressed in this article do not represent the official position of the platform. We recommend that readers conduct their own research and consult with a professional before making any investment decisions.