Doubts emerge over the Bitcoin corporate treasury model as institutional BTC investment vehicles cut holdings.
Bitcoin (BTC) institutional investment vehicles have shed 10% of their BTC holdings since May as analysis warns of a “breaking” sector.
Data from onchain analytics platform CryptoQuant shows that combined institutional BTC exposure, which includes trusts, exchange-traded funds (ETFs) and closed-end funds, has fallen from 1.33 million to 1.20 million BTC over three months.
Bitcoin fund holdings. Source: CryptoQuant
The drawdown comes as another major Bitcoin institutional investment vehicle, corporate treasuries, faces upheaval. Business intelligence software company Strategy, which holds the largest Bitcoin treasury of any public corporation, sold 1,638 BTC last week.
“Bitcoin treasury companies once amplified demand through a reflexive financing loop. Their shares traded above the value of their Bitcoin holdings, allowing them to issue equity or debt, buy more Bitcoin and reinforce the premium. That mechanism weakens when market capitalisations fall below net asset value, and financing becomes dilutive,” contributing analyst Novaque Research commented.
CryptoQuant highlights the plight of several Bitcoin treasury companies with stock trading below the net asset value (NAV) of their BTC holdings. In Strategy’s case, the discount disappears according to the valuation methodology used.
Basic share count puts the discount at 0.7 as of Thursday, but once the company’s $8 billion debt and liquidation preference of its STRC preferred stock is factored in, the mNAV equals 1.03.
Strategy Updated mNAV. Source: Bitcoin Treasuries
“The on-chain evidence supports a loss of institutional demand, although it cannot directly isolate treasury companies,” CryptoQuant notes.
The drawdown in both fund exposure and Bitcoin treasury holdings comes as the Coinbase Premium index sees a record 93 days of negative readings.
Related: Bitcoin price-metric basket sees longest capitulation since FTX blow-up: Glassnode
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