The Risks Faced by Bitcoin’s Biggest Supporters

Bitcoin is encountering challenges as its major supporters, such as ETFs and corporate treasuries, start to pull back investment. This shift may lead to reduced liquidity, impacting Bitcoin’s price and stability. While Bitcoin’s network remains robust, the traditional corporate treasury model tied to its value is feeling the strain. These developments signal a potential shift in the financial landscape surrounding Bitcoin.

Key Takeaways

Recent outflows from ETFs, a decrease in stablecoin supply, and falling Digital Asset Treasuries (DAT) premiums have weakened liquidity and adversely affected Bitcoin’s balance sheet models.
While corporate treasuries may face financial pressures, Bitcoin itself operates independently and continues to function as intended.
The growing complexities and challenges of Bitcoin's maturity may mirror common adult issues: obligations, debt, and poor timing. The entities that initially propelled Bitcoin's growth are now contributing to its decline.
Research indicates a broken reflexive loop, suggesting that liquidity is slipping away from the market.

bitcoin BTC

The Shift in Liquidity

Throughout 2025, Bitcoin (BTC) ETFs attracted significant investment, fueling price increases. Digital Asset Treasuries (DATs) contributed to this demand, with share prices trading at premiums, while a surge in stablecoin balances ensured liquidity flowed through the crypto markets.

However, NYDIG’s latest findings reveal a reversal in all three of these key drivers. Spot Bitcoin ETFs experienced four consecutive weeks of outflows, totaling $1.22 billion from November 17th to 21st. What was once a steady influx of investment has now shifted to selling pressure.

DAT premiums have significantly declined, reducing the appeal for corporate purchases of Bitcoin. Although AMBCrypto previously reported that crypto treasuries have collectively lost over $45 billion as major assets fell by 30-50%, some venture capitalists maintain that DATs have not been forced to sell off their assets.

Recently, stablecoin supply also shrank for the first time in several months, indicating that liquidity is disappearing from the market.

Interestingly, Bitcoin dominance (BTC.D) has increased, but only because other cryptocurrencies have declined at a faster rate. This capital shift is driven more by a desire for safety than by strong conviction.

Evaluating the Corporate Strategy

MicroStrategy (MSTR) exemplifies how Bitcoin's loudest advocates can become significant liabilities. Once seen as a model for corporate investments centered around Bitcoin, the company's recent struggles illustrate the model's weaknesses when external conditions worsen.

While the figures still look impressive—nearly 650,000 Bitcoin, accounting for over 3% of total supply—cracks are appearing in this façade. The issue lies in cash flow: MicroStrategy has $54 million in cash but owes $700 million annually in preferred dividends, obligations that take priority over all else. Additionally, the company’s software division is underperforming, necessitating fresh capital simply to meet existing debts.

In the first three quarters of 2025, nearly $20 billion was directed not towards acquiring Bitcoin but towards managing debt obligations. This reliance on favorable market conditions took a downturn in November.

MicroStrategy’s financial model depended on its stock price being higher than the value of its Bitcoin holdings. As share values dropped to align with the net asset value, the practice of issuing new shares to raise capital shifted from being beneficial to dilutive.

To draw in investors, the company increased its preferred dividend from 9% to 10.5%, yet each hike only escalated its financial burden. Continued declines in share price would lead to rising dividends, thrusting MicroStrategy closer to a point where it may need to sell Bitcoin, a move it has previously insisted it would not take.

The events in October demonstrated how quickly liquidity can dwindle during turbulent times, revealing that even the sale of 100,000 Bitcoin could overwhelm the market.

Upcoming Decisions and Potential Fallout

As noted by writer Shanaka Anslem Perera, pressure could escalate on January 15th, when MSCI will decide whether companies holding over 50% of their assets in digital currencies will be excluded from major indices. MicroStrategy currently stands at 77% in Bitcoin holdings.

The October market crash underscored how MSCI can instigate panic selling, especially when coupled with bearish reports from firms like JPMorgan. While Saylor emphasized that MicroStrategy operates as a functioning business, the ambiguity may persist until the policy is finalized.

JPMorgan has estimated that forced selling by index funds could reach $2.8 billion, possibly resulting in total outflows of up to $8.8 billion. This represents 15-20% of MicroStrategy’s market capitalization, driven by algorithms that do not consider the company’s mission or its commitment to Bitcoin maximization.

The trends of ETF outflows, shrinking DATs, and decreasing stablecoin supply all coincide with MicroStrategy's funding framework approaching a critical breaking point.

The Future of Bitcoin and Its Advocates

Despite growing corporate risks, sovereign interest in Bitcoin remains steadfast. For instance, El Salvador recently purchased $100 million in Bitcoin during the current market fluctuations. It’s vital to note that sovereign investors typically have long-term perspectives, while corporations often work within tighter 90-day financing cycles.

Overall, while Bitcoin does not seem to face an existential threat, the traditional corporate treasury model may be reaching its limits. Faith among supporters persists, but the market is primarily focused on liquidity.

In Bitcoin's institutional era, its most fervent advocates could inadvertently become significant sources of risk. The next 90 days will be critical—not for Bitcoin's survival, but for determining which institutions will thrive alongside it.