Approximately 10% of all Bitcoin (CRYPTO: BTC)—roughly 2 million coins— held by traditional financial institutions are now at unrealized losses approaching $7 billion, according to Bianco Research’s Jim Bianco.

The Institutional Underwater Problem

The 11 spot Bitcoin ETFs hold 1.29 million BTC worth over $115 billion, representing about 6.5% of circulating supply. 

Their average purchase price sits at $90,200—roughly $13,000 above current levels.

Adding to the institutional pain, Strategy (NASDAQ:MSTR) owns 713,000 BTC with an average purchase price of $76,020. 

Combined, these institutional holders control 10% of all Bitcoin at a collective average cost of $85,360.

With BTC trading around $77,000, the entire “boomer” cohort sits approximately $8,000 underwater per coin. Bianco warns these holders need “a new narrative” as losses mount.

ETFs Hit Record 10-Day Exodus

The spot Bitcoin ETF complex recorded 10 consecutive days of outflows—the longest losing streak on record. 

January alone saw $1.61 billion in net outflows, following December’s $1.09 billion and November’s massive $3.48 billion exodus.

On January 29, these products recorded their worst single day since November with $818 million in outflows. 

Even BlackRock’s IBIT shows negative returns for the year despite attracting $25.1 billion in 2025 inflows, indicating many investors bought near cycle highs.

Strategy’s Funding Model Breaks Down

Strategy’s unrealized profit collapsed from over $35 billion at Bitcoin’s October peak to approximately $1.17 billion currently. 

The damage extends beyond paper losses as Strategy’s mNAV value fell to 0.94x, meaning its stock trades at a 6% discount to the Bitcoin backing each share. 

This creates a critical problem because the company’s entire strategy depends on issuing shares above net asset value.

When shares trade at a discount, new issuance destroys shareholder value instead of creating it. 

Bitcoin-per-share accretion—historically the justification for dilutive raises—is approaching zero. Between January 5 and late January, this metric barely moved despite continued purchases.

CryptoQuant CEO Ki Young Ju warned that while a 70% crash to $25,000 appears unlikely, it becomes possible if Strategy faces forced liquidation. Saturday’s drop below $76,037 briefly put the company’s position underwater.

What This Means For Bitcoin

The CME Bitcoin futures market opened Monday with a $6,830 gap—the second-largest on record—as open interest fell 10.5% with traders reducing leverage exposure.

Historical precedent offers little hope. After the 2021 peak, Bitcoin took 28 months to recover. After the 2017 ICO boom, recovery took nearly three years. 

The selloff pushed Bitcoin out of the global top 10 assets by market cap, now trailing Tesla and Saudi Aramco.

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