Omid Malekan Says Crypto Treasuries Hurt Bitcoin

Reflecting this pressure, U.S. spot Bitcoin and Ethereum ETFs saw $797 million in combined outflows on Tuesday, which suggests that there has been a decisive shift in institutional sentiment due to fears of delayed Federal Reserve rate cuts and a stronger dollar. Despite the downturn and heightened market fear, analysts like Derek Lim still believe that crypto’s long-term bullish structure is intact.

Crypto Firms Fueling Bitcoin’s Decline

Blockchain author and Columbia Business School adjunct professor Omid Malekan argued that discussions around Bitcoin’s recent price drop are overlooking a crucial factor — the impact of crypto treasury companies, also known as digital asset treasuries (DATs). According to Malekan, these entities, which became more common in 2025, contributed to the ongoing market decline through unsustainable business models and excessive token extraction.

“Any analysis of why crypto prices continue to fall needs to include DATs,” Malekan said in a post on X, and called them “a mass extraction and exit event — a reason for prices to go down.” He added that only a handful of these firms have genuinely tried to create sustainable value, while many others have been driven by speculative motives.

Over the past few weeks, Bitcoin dropped from its October all-time high of over $126,000 to trade between $99,000 and $113,000. Analysts attribute much of the weakness to trade tensions between the United States and China and other macroeconomic headwinds. 

However, Malekan’s comments suggest that corporate behavior in the crypto ecosystem may also be to blame. He claimed that many of the companies that bought Bitcoin and other digital assets for their balance sheets were set up by founders looking to capitalize on investor enthusiasm rather than build long-term businesses.

“Launching any kind of public entity is expensive,” Malekan explained, and pointed to the millions spent on fees for bankers, lawyers, and listing structures like SPACs and PIPEs. He suggested that much of the capital raised went to cover those costs, leaving firms financially stretched and dependent on token sales or debt to fund operations.

This year alone, 48 new companies reportedly added Bitcoin to their balance sheets, bringing the total number of corporate holders to 207 with more than one million BTC — worth over $101 billion. Ethereum also saw strong adoption, with 70 firms collectively holding 6.14 million ETH worth more than $20 billion.

207 public companies holding BTC (Source: BitcoinTreasuries.NET)

While the rise of DATs has been considered a sign of institutional adoption, Malekan warned that it may have instead amplified volatility by turning once-locked tokens into liquid supply. “Raising too much money and minting too many tokens even if they are locked or for ecosystem growth is the gangrene of crypto,” he said.

Outflows Hit Bitcoin and Ethereum ETFs

The pressure on the crypto market was also reflected in the performance of spot crypto exchange traded funds (ETFs). In fact, Bitcoin and Ethereum spot ETFs in the United States saw massive outflows totaling $797 million on Tuesday, which suggests that there has been a major shift in institutional sentiment.

Bitcoin ETF flows (Source: Farside Investors)

Data from Farside Investors shows that spot Bitcoin ETFs recorded $566.4 million in outflows, which was the largest single-day withdrawal since Aug. 1. Fidelity’s FBTC led the exodus with $356.6 million exiting the fund, followed by Ark & 21Shares’ ARKB with $128 million and Grayscale’s GBTC with $48.9 million. In total, seven Bitcoin ETFs reported negative flows, extending their outflow streak to five consecutive days and bringing the total outflows during this period to $1.9 billion.

Ethereum ETFs were not spared, with $219.37 million in net outflows led by BlackRock’s ETHA, which saw $111 million leave the fund. Grayscale and Fidelity’s Ethereum ETFs also recorded big withdrawals. Meanwhile, Solana ETFs managed to buck the trend with $14.83 million in net inflows, though this was their smallest daily increase since launching last week.

Ethereum ETF flows (Source: Farside Investors)

Rachael Lucas, a crypto analyst at BTC Markets, described the latest ETF movements as “a decisive shift in institutional positioning,” and explained that this is more than a temporary pause — it represents a broader recalibration of strategy. She believes that institutions are reducing exposure as part of risk management after the US Federal Reserve’s recent hawkish stance. Fed Chair Jerome Powell’s comments last month dimmed hopes for a December rate cut and strengthened the US dollar index above 100, fueling a selloff across risk assets, including crypto.

The broader sentiment soured very quickly, with the crypto Fear and Greed Index plunging to 21 from 42 in a single day, indicating “extreme fear.” Derek Lim, research lead at Caladan, said Powell’s statements and concerns about the US government shutdown amplified uncertainty and triggered a risk-off mood.

Despite the turbulence, Lim still believes that the long-term bullish outlook for crypto remains intact. He argued that while delayed rate cuts might weigh on markets short term, the overall macro environment is still moving toward monetary easing. Lim added that Bitcoin’s recent 21.5% correction from $125,000 to $99,000 is relatively moderate compared to earlier pullbacks this year.