Bitcoin News Today: "Bitcoin Treasuries' Liquidity Crisis: ETF Exodus Threatens $8.8B Exodus"

Digital asset treasuries, once a cornerstone of institutional Bitcoin exposure, are facing mounting challenges as market dynamics shift. MicroStrategy (MSTR.O) and other corporate Bitcoin holders have seen inflows stall, with net flows dropping to $1.3 billion in recent months. The largest corporate bitcoin holder, MicroStrategy, [cut its 2025 earnings forecast dramatically](https://www.reuters.com/business/strategy-sharply-cuts-annual-earnings-forecast-bitcoin-tumbles-2025-12-01/) after Bitcoin prices plunged below $90,000, marking its steepest monthly decline since 2021. The company now [projects a net loss of $5.5 billion](https://seekingalpha.com/news/4526900-strategy-establishes-144b-usd-reserve-to-navigate-market-volatility-updates-guidance) to $6.3 billion for the year, a stark reversal from its earlier $24 billion profit target.

To navigate the volatility, MicroStrategy [announced a $1.44 billion U.S. dollar reserve](https://seekingalpha.com/news/4526900-strategy-establishes-144b-usd-reserve-to-navigate-market-volatility-updates-guidance), funded through the sale of class A shares, to cover dividend and debt obligations for at least 12 months. This move, intended to reduce reliance on Bitcoin's price swings, [coincided with a 9% stock price drop](https://coincentral.com/strategy-inc-mstr-stock-drop-9-as-new-1-44b-usd-reserve-reshapes-2025-outlook/) - the largest decline in over a year. The reserve aims to provide liquidity without triggering forced Bitcoin sales, a concern as the company's market-to-nav (mNAV) ratio fell to 1.14, [nearing the 1.0 threshold](https://coincentral.com/strategy-builds-1-44b-reserve-to-avoid-bitcoin-liquidation-risk/) that could necessitate asset liquidation.

The broader sector is under scrutiny as index providers like MSCI [consider excluding digital asset treasuries](https://cryptoslate.com/inside-the-jpmorgan-boycott-drama-to-defend-strategys-inclusion-in-major-indexes/) from equity benchmarks if crypto holdings exceed 50% of total assets. JPMorgan estimates that such a reclassification could force up to $8.8 billion in passive fund outflows from companies like MicroStrategy, exacerbating liquidity pressures.

This aligns with a growing trend of institutional capital shifting from corporate treasuries to regulated Bitcoin ETFs, which offer purer exposure without balance-sheet risks. BlackRock's IBIT alone holds 6.8% of Bitcoin's circulating supply, signaling a structural reallocation of assets.

Meanwhile, smaller treasuries face heightened fragility. Over 190 U.S. companies have adopted Bitcoin treasury strategies, but many rely on convertible debt and private placements to fund purchases. As equity valuations weaken, boards may be forced to sell crypto to stabilize balance sheets. This dynamic has already affected Solana-focused treasuries, which saw a 40% drawdown in net asset value, [raising risks of $4.3 billion](https://cryptoslate.com/inside-the-jpmorgan-boycott-drama-to-defend-strategys-inclusion-in-major-indexes/) to $6.4 billion in forced liquidations.

Despite these challenges, innovation in the digital asset space persists. HashKey Cloud, a Web3 infrastructure provider, [partnered with Japan's Quantum Solutions](https://www.lookonchain.com/feeds/38556) to launch the country's first DAT staking collaboration, leveraging Ethereum (ETH) restaking to expand institutional-grade yield strategies. This marks a step toward diversifying digital asset ecosystems beyond Bitcoin, though Bitcoin remains the dominant asset for treasuries.

MicroStrategy's pivot to a "Bitcoin-backed structured finance company" underscores the sector's resilience. However, the path forward is uncertain. As JPMorgan's analysis highlights, [the exclusion of treasuries from major indexes](https://cryptoslate.com/inside-the-jpmorgan-boycott-drama-to-defend-strategys-inclusion-in-major-indexes/) could accelerate the migration of BTC exposure into ETFs, reshaping the landscape of Bitcoin ownership. For now, the sector's survival hinges on maintaining liquidity buffers, securing capital, and navigating regulatory scrutiny - a precarious balancing act in an increasingly volatile market.