New Bitcoin treasuries may crack under price pressure

Key Points

  • Growing Trend: A significant number of publicly listed companies, inspired by MicroStrategy (now Strategy), are adding Bitcoin to their corporate treasuries, with 22 entities joining in a 30-day period up to June 11.**
  • Financial Risks: Many new entrants have weaker financials and entered at higher average Bitcoin prices, risking underwater positions if BTC drops below $90,000, potentially triggering sell-offs and liquidations.**
  • Regulatory and Market Shifts: The rise of Bitcoin ETFs and evolving regulations may reduce demand for proxy exposure through companies, potentially pressuring valuations of firms trading at high net asset value multiples.**
  • Untested Resilience: Unlike Strategy, which survived the 2022 crypto crash without forced sales, newer Bitcoin treasury companies lack a proven track record in handling significant price corrections.**
  • Alternative Strategies: Institutional interest is diversifying, with Bitcoin mining emerging as an attractive option for acquiring "virgin" Bitcoin, though it remains highly competitive due to halvings and rising hashrate.**

Summary

A wave of publicly listed companies is adopting Bitcoin as a corporate treasury asset, following the lead of Strategy (formerly MicroStrategy), the largest corporate Bitcoin holder with 582,000 BTC as of June 11. Over a 30-day span, 22 entities joined this trend, but concerns are mounting. Critics warn that many newcomers, entering at higher prices with weaker financials, risk significant losses if Bitcoin falls below $90,000, potentially causing liquidations and damaging Bitcoin’s reputation. Standard Chartered Bank highlights systemic risks from debt-funded positions and notes that regulatory maturation and Bitcoin ETFs could diminish the appeal of proxy stocks like Strategy. Unlike Strategy, which endured the 2022 crash, newer firms are untested against major corrections. Meanwhile, alternatives like Bitcoin mining are gaining traction for producing "clean" coins, though competition is fierce due to halvings. Corporate ownership now accounts for over 5% of Bitcoin’s supply, raising questions about decentralization, though some argue this aligns with Bitcoin’s value-driven adoption by institutions. Physical risks of self-custody also push regulated investment avenues.

cointelegraph
June 12, 2025
Crypto
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