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Corporate Bitcoin sell-off incoming? Market signals hint that big players could be preparing to exit soon

Corporate Bitcoin sell-off incoming? Market signals hint that big players could be preparing to exit soon

Time of India3 days ago

The recent price rally of Bitcoin has been due to companies putting the cryptocurrency onto their balance sheets as treasury assets, as per a report. While this tide of corporate investment has led to Bitcoin's price surge, but a new analysis indicates that it also may be setting the stage for a profound market risk: a mass corporate sell-off, as per Benzinga.
Corporate Bitcoin Buying Pushes Prices Higher
Many companies over the last few months have followed in the footsteps of MicroStrategy, the company that made Bitcoin a core part of its corporate treasury strategy, as per the report. Based on data from Bitcoin Treasuries, 110 publicly traded companies globally currently hold Bitcoin, which is a major change in institutional interest, as per Benzinga.
61 Companies Alone Hold 674,000 Bitcoins
Standard Chartered recently focused in on 61 such companies, those that have Bitcoin as only a treasury asset, apart from industry participants like miners, exchanges, and service providers, reported Benzinga. Through the end of May, these companies collectively owned almost 674,000 bitcoins, or approximately 3.2% of bitcoin's total 21 million coin supply, as per the report.
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The banks also found that the holdings of these corporates have doubled in two months, with almost 100,000 new bitcoins added over those months, and this is a key factor driving Bitcoin to recent all-time highs, reported Benzinga.
Risk Builds Beneath the Surface
However, Standard Chartered's report identified a risk that could turn the market tide. Most of the newer corporate investors purchased their Bitcoin well above prices paid by early entrants such as MicroStrategy. The bank estimates that if Bitcoin fell below $90,000, roughly half of these
corporate treasuries
would be faced with trouble, creating a potential domino effect where companies could become forced sellers during market downturns, as per Benzinga.
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According to the bank's analysis, if Bitcoin falls more than 22% below companies' average purchase prices, forced selling could happen, as per the report. "This creates a feedback loop where price declines trigger corporate selling, potentially accelerating further declines," Benzinga wrote in its report.
FAQs
Why are companies buying Bitcoin?
Many see it as a way to diversify their holdings and hedge against inflation, following examples like MicroStrategy.
How much Bitcoin do companies hold right now?
Over 110 publicly traded companies hold Bitcoin, with 61 of them holding a combined 674,000 coins.

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