Are the reasons for the sharp drop in BTC price due to the largest buyer ceasing to increase its holdings and ETF inflows weakening?

Original Title: Why did Bitcoin’s largest buyers suddenly stop accumulating?

Source: CryptoQuant; Compiled by: Jinse Finance

For most of 2025, Bitcoin’s bottom appeared unbreakable, thanks to the seemingly unlikely alliance between corporate treasury departments and ETFs.

Corporate companies issued stocks and convertible bonds to buy Bitcoin, while ETF inflows quietly absorbed the new supply. These factors combined to create a persistent demand base, helping Bitcoin withstand increasingly tight financial conditions.

Now, this base is shifting.

On November 3, Charles Edwards, founder of Capriole Investments, published an article on X stating that his optimism about the market has weakened as institutional accumulation slows.

He pointed out, "For the first time in seven months, net institutional buying has fallen below the daily mining supply. This is not good." [Image: Bitcoin Institutional Buying (Source: Capriole Investments)] According to Edwards, this is a key indicator that keeps him optimistic, even though other assets are outperforming Bitcoin. However, he noted that currently, approximately 188 corporate treasury departments hold significant amounts of Bitcoin, many of which have business models limited to their token exposure.

Bitcoin Treasury Buying Slows Down

No company represents corporate Bitcoin trading better than MicroStrategy, which recently shortened its name to Strategy.

The software maker, led by Michael Thaler, has transformed into a Bitcoin treasury company and now holds over 674,000 Bitcoins, solidifying its position as the largest single corporate holder.

However, its buying pace has slowed significantly in recent months.

For reference, Strategy added approximately 43,000 Bitcoins in the third quarter, its lowest quarterly purchase this year. This figure is not surprising given that some of the company's Bitcoin purchases during this period plummeted to just a few hundred.

CryptoQuant analyst JA Maarturn explains that this slowdown may be related to a decline in the strategy's net asset value.

He stated that investors previously paid a high "net value premium" for every dollar of Bitcoin on Strategy's balance sheet, effectively leveraging this to allow shareholders to share in the gains from Bitcoin's appreciation. However, this premium has narrowed since mid-year. With fewer valuation-boosting factors, issuing new shares to buy Bitcoin no longer has the same value-adding effect as before, thus weakening the incentive to raise capital. Maarturn points out: “Raising funds has become more difficult. The equity offering premium has fallen from 208% to 4%.” [Image: MicroStrategy's equity premium (Source: CryptoQuant)] Meanwhile, the cooling trend isn't limited to MicroStrategy. Metaplanet, a Tokyo-listed company whose model emulates US Bitcoin pioneer MicroStrategy, recently saw its share price fall below the market capitalization of its Bitcoin holdings after a significant drop. In response, the company approved a share buyback program and introduced new financing guidelines to expand its Bitcoin reserves. This move demonstrates the company's confidence in its balance sheet, but also highlights waning investor enthusiasm for the "digital asset reserve" business model. In fact, the slowdown in Bitcoin treasury acquisitions has led to mergers among some of these companies. Last month, asset management firm Strive announced its acquisition of the smaller Bitcoin reserve firm Semler Scientific. This deal will allow these companies to hold nearly 11,000 Bitcoins at a premium, as Bitcoin is increasingly becoming a scarce resource in the industry. These examples reflect structural constraints, not a loss of faith. When equity or convertible bond issuances no longer enjoy a market premium, capital inflows dry up, and corporate capital accumulation naturally slows. What about ETF liquidity? Spot Bitcoin ETFs have long been seen as automatic absorbers of new supply, but they are now showing similar signs of weakness. For most of 2025, these financial investment vehicles have dominated net demand, with creation consistently exceeding redemptions, especially during Bitcoin's surge to all-time highs. However, by late October, fund flows began to become volatile. Portfolio managers adjusted their positions, and risk departments reduced their investment exposure based on changing interest rate expectations, leading to negative inflows in some weeks. This volatility marks a new phase in Bitcoin ETF behavior. The macroeconomic environment is tightening, market expectations for rapid interest rate cuts have subsided; real yields are rising, and liquidity conditions are cooling. Despite this, demand for Bitcoin remains strong, but now it is occurring in bursts rather than sustained waves. SoSoValue data confirms this shift. In the first two weeks of October, digital asset investment products attracted nearly $6 billion in inflows. However, by the end of the month, some of these gains were reversed as redemptions increased to over $2 billion.

Bitcoin ETF Weekly Fund Flows (Source: SoSoValue)

This pattern indicates that Bitcoin ETFs have evolved into a truly two-way market. They still offer ample liquidity and access to institutional investors, but are no longer a tool for one-way accumulation.

When macroeconomic signals fluctuate, ETF investors can sell as quickly as they initially bought.

Market Impact on Bitcoin

This constantly changing situation does not necessarily indicate an economic recession, but it does imply greater volatility. As the absorption capacity of corporations and ETFs weakens, Bitcoin's price movements will be increasingly influenced by short-term traders and macroeconomic sentiment.

Edwards believes that in this scenario, new catalysts such as monetary easing, regulatory clarity, or a return to risk appetite in the stock market could reignite institutional investor buying enthusiasm. However, the more cautious approach of marginal buyers makes price discovery more sensitive to the global liquidity cycle. Therefore, this impact is twofold. First, the structural bids that previously provided support are weakening. During periods of supply and demand imbalance, the ability to suppress volatility decreases due to fewer stable buyers, potentially leading to increased intraday price volatility. While the April 2024 halving mechanically reduces new supply, scarcity alone cannot guarantee price increases without sustained demand. Second, Bitcoin's correlation is shifting. As balance sheet expansion slows, Bitcoin may once again align with the broader liquidity cycle. Rising real yields and a stronger dollar could put downward pressure on prices, while a looser market environment could allow it to regain its leading position during periods of increased risk appetite. Essentially, Bitcoin is re-entering a phase of macro reflexivity, behaving less like digital gold and more like a high-beta risk asset. At the same time, none of this negates Bitcoin's long-term prospects as a scarce, programmable asset. On the contrary, this reflects the growing influence of institutional factors that once shielded Bitcoin from retail price volatility. The very mechanisms that initially propelled Bitcoin into mainstream portfolios are now more closely tied to the gravitational pull of capital markets. The coming months will test whether the asset can maintain its store-of-value appeal without inflows from automated corporations or ETFs. If history is any guide, Bitcoin tends to adapt: ​​when one channel of demand slows, another often emerges—whether from sovereign reserves, fintech consolidation, or a renewed increase in retail participation during periods of macro easing.