Strategy’s (MSTR) latest bitcoin The sale has had an overall impact on market sentiment, but Wall Street bank Citi does not see the move as a change to the company’s long-term strategy.
The bank said the sale was expected after Strategi signaled plans to divest certain tax-deferred bitcoin holdings during the first-quarter earnings call as part of a portfolio optimization effort.
“Recent flows have been negative and the chances of the passage of a US Market Structure Act (a potential catalyst for renewed investor interest in our view) are diminishing,” analyst Alex Saunders wrote in Tuesday’s report.
Markets were rattled this week after Strategy disclosed the sale of a small portion of its bitcoin holdings, marking a rare departure from Executive Chairman Michael Saylor’s long-standing “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 backers could become a seller, contributing to a bout of weakness in BTC and renewed scrutiny of the digital treasury model.
Saunders continues to see spot bitcoin exchange-traded fund (ETF) flows as the primary driver of BTC prices, estimating that they account for around 45% of weekly return variation. 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 emerged as key buyers of bitcoin, the analyst does not believe treasury-related selling is a significant 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 law being passed this year appear to be diminishing, reducing the likelihood of a short-term catalyst for new investors.
Combined with bitcoin’s underperformance relative to stocks, the fading regulatory outlook is likely to keep sentiment subdued absent legislative progress or renewed concerns about fiscal sustainability, the report added.
The announcement of Strategy’s first bitcoin sale in years weighed on sentiment this week, raising concerns about potential sales of digital asset finance companies and pushing BTC lower. The world’s largest cryptocurrency was trading around $67,200 at the time of publication.
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