Strategy's bitcoin sale may have rattled markets, but the bigger issue is missing demand from new buyers, Citi said.
Updated Jun 3, 2026, 2:13 p.m. Published Jun 3, 2026, 1:29 p.m. 2 min read
Strategy's (MSTR) recent bitcoin BTC$66,924.57 sale has had an outsized impact on market sentiment, but Wall Street bank Citi says spot bitcoin exchange-traded fund (ETF) flows are the primary driver of BTC prices.
Markets were rattled 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. The largest cryptocurrency has slumped 9% since Sunday and earlier Wednesday dropped to the lowest since March.
The sale should not have been a surprise, the bank said. Executive Chairman Michael Saylor mentioned plans to dispose of certain tax-disadvantaged bitcoin holdings as part of a portfolio optimization effort during its first-quarter earnings call. A bigger issue is the lack of investor demand.
"Recent flows have been negative, and the chances for the passage of a U.S. market structure bill (a potential catalyst for renewed investor interest in our view) are diminishing," analyst Alex Saunders wrote in the Tuesday report.
Saunders said spot bitcoin exchange-traded fund (ETF) flows remain the primary driver of BTC prices, estimating they account for about 45% of weekly return variation. The ETFs have experienced a record 11 straight days of net outflows, which, he said, signals a broader lack of investor demand for the cryptocurrency.
The report also warned that the chances of a U.S. crypto market structure bill passing this year appeared to be declining, reducing the likelihood of a near-term catalyst for fresh investor inflows.
Combined with bitcoin's underperformance relative to equities, the fading legislative outlook is likely to keep sentiment muted absent regulatory progress or renewed concerns about fiscal sustainability, the report added.
Read more: Bitcoin faces outsized quantum threat as computing breakthroughs accelerate, Citi says
UPDATE (June 3, 14:10 UTC): Adds BTC performance this week, ETF outflow streak record)
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