BlackRock and Fidelity Join Forces to Sell! MicroStrategy (MSTR) Stock Loses $5.4 Billion in a Single Quarter

According to summary filing data, during the period from the end of Q2 2025 to the end of Q3 2025, institutional portfolios reduced their notional exposure to MicroStrategy (MSTR) by approximately $5.38 billion, dropping from about $36.32 billion to around $30.94 billion. This equates to a roughly 14.8% decrease in institutions’ notional holdings. Major fund managers such as BlackRock and Fidelity each cut investments by over $1 billion or close to $1 billion.

MicroStrategy: From Bitcoin Proxy Essential to Optional

For some time, holding bitcoin has been professionally awkward. Large asset management firms couldn’t access it, compliance teams didn’t know how to handle it, and internal rules often prohibited direct custody of anything resembling a bearer instrument. But stocks? Stocks were fine. That’s why Virginia-based MicroStrategy Inc. became the most-traded bitcoin proxy on the U.S. stock market.

In 2020, after CEO Michael Saylor transformed the entire company into a bitcoin holding vehicle, institutional investors started buying MSTR shares—not for its software solutions, but for its balance sheet. The goal was to find a liquid, listed, regulator-approved asset that allowed investors to gain bitcoin exposure on paper, without holding actual bitcoin.

That trade lasted four years. Saylor issued convertible bonds, spent billions on bitcoin, and expanded shareholder exposure far beyond the spot market. MSTR became Wall Street’s shadow ETF for those who couldn’t buy one. There was real demand: MSTR once traded at twice its per-share net bitcoin value.

The company leaned into this strategy. “We are a leveraged long bitcoin company,” Saylor said in 2021. Some analysts even abandoned modeling software revenues when evaluating MicroStrategy’s performance. Many investors viewed MSTR stock as a synthetic bitcoin investment. Their logic: direct bitcoin investment still faced restrictions, but MSTR’s price closely tracked bitcoin’s.

This setup worked—until it didn’t. Spot bitcoin ETFs and other regulated custody solutions now mean large portfolios can hold bitcoin without the drawbacks of the stock. As institutional strategies evolve, assets like MSTR are no longer essential, but instead, optional.

Q3 Reversal: $36.3B Drops to $30.9B

(Source: Time Chain Index)

According to changes in summary filing data, this was not due to a drop in price. Bitcoin remained relatively stable this quarter, hovering around $95,000 and even hitting an all-time high of $125,000. During this period, MSTR’s price mostly traded sideways, around $175. This price stability effectively rules out forced selling and deleveraging as the main drivers. There were no collapses to blame, either.

This means risk exposure vanished because institutions proactively exited. Major fund managers—Capital International, Vanguard, BlackRock, and Fidelity—each trimmed investments by over $1 billion or close to $1 billion. The reduction encompassed institutional investors at large, not just fringe players. These are Wall Street’s most influential asset management giants, and their coordinated sell-off signals an organized strategic adjustment, not isolated decisions.

Overall, the value of all products dropped by 14.8%. That may not sound catastrophic, but in dollar terms, it’s huge, and structurally, it marks a turning point. The $5.3 billion reduction must be viewed in context. On one hand, it’s a massive sum—even on Wall Street, where hundreds of billions trade daily, it’s enough to make an impact.

On the other hand, relative to total institutional MSTR holdings, it’s not everything; institutional holdings at the end of Q3 still exceeded $31 billion. Imagine a $100 billion fund pulling $15 billion from a single trade; it’s obvious, but exposure remains. That’s the state of MicroStrategy: still widely held, still influential, but no longer unique or immune.

In other words: If you held $100 worth of institutional MSTR exposure at the end of Q2, by the end of Q3 you’d have about $85.20. If you held $1 billion, your exposure would drop to around $852 million. This decline is significant because it signals a shift in conviction. But the trade is far from gone; it’s more that institutions are quietly exploring alternatives.

Major Institutional Reductions in MicroStrategy Holdings

Capital International: Reduced by over $1 billion

Vanguard: Reduced by over $1 billion

BlackRock: Reduced by nearly $1 billion

Fidelity: Reduced by nearly $1 billion

Total reduction: $5.38 billion (institutional holdings down 14.8%)

History bears this out. In 2021, when bitcoin hit early peaks and volatility was high, MSTR shares traded at nearly twice the value of their net bitcoin holdings. That gap has since narrowed. From this perspective, Q3’s reduction signals a shift from scarcity-driven premium to optionality-driven flexibility.

Q4 Bitcoin Trend Will Decide MSTR’s Fate

The picture changed in Q4. Bitcoin has pulled back from recent highs. Another pause or correction in bitcoin could test the resolve of remaining MSTR holders. If bitcoin stays below $90,000 for a while, it will expose the leverage baked into MicroStrategy: corporate debt, equity dilution risks, and software performance masked by treasury holdings.

However, if bitcoin finds support at $100,000 or higher, MSTR, as an enhanced bitcoin investment vehicle, may retain its appeal. If bitcoin surges again, institutions might change strategies and increase MSTR exposure. Conversely, a drop to $80,000 could prompt further reductions.

Both scenarios suggest that Q4 filings may show MSTR exposure either reduced further or returning to prior levels, but it’s unlikely to increase versus Q2. This transition is important—it marks a milestone in the maturation of bitcoin investing. For some time, MSTR stock was Wall Street’s workaround; now, that workaround is mainstream.

For those still bullish on bitcoin’s long-term prospects and able to bear company risk, MSTR remains a viable option. For investors seeking pure bitcoin exposure without corporate risk, the channels are now broader. The proxy era has changed, and the 14.8% drop in institutional MSTR holdings matters because it reflects a change in mindset.