Navigating the Risks of a Bitcoin Treasury Strategy: Expert Insights
David ClarkeRoughly half of Bitcoin treasuries established by non-crypto companies will be forced to liquidate if Bitcoin falls below $90,000, the Standard Chartered analyst wrote.[...]
SolarBank Joins Bitcoin Treasury Trend, but Analyst Warns of Risks
Energy infrastructure firm SolarBank plans to add Bitcoin to its balance sheet, joining a growing list of public companies accumulating the cryptocurrency. However, analysts warn this strategy—first popularized by software firm Strategy—comes with potential risks.
Corporate Bitcoin Holdings Face Downside Risk
Geoffrey Kendrick, Standard Chartered's Global Head of Digital Assets Research, noted in an investor report that Strategy imitators have doubled their Bitcoin holdings to nearly 100,000 BTC in the past two months. These companies acquired Bitcoin at significantly higher prices than Strategy's initial purchases.
Kendrick estimates that if Bitcoin falls below $90,000, roughly half of the Bitcoin treasuries held by 61 non-crypto public companies would be underwater. A 22% drop below average purchase prices could trigger liquidations, according to Standard Chartered.
Potential Long-Term Market Impact
The analyst warned that corporate Bitcoin treasuries might eventually exert downward pressure on Bitcoin's price. As anti-crypto regulations ease and investment committees become more crypto-friendly in the U.S. and elsewhere, market inefficiencies that currently support Bitcoin's price could diminish.
"Bitcoin treasuries are adding to Bitcoin buying pressure for now, but we see a risk that this may reverse over time," Kendrick wrote.
Growing Corporate Adoption Despite Risks
Despite these concerns, corporate Bitcoin adoption continues to rise. SolarBank, a Canadian solar energy and clean infrastructure provider, announced its Bitcoin treasury strategy this week—though it didn't disclose purchase amounts or timelines.
According to bitcointracker.net, 223 entities now hold Bitcoin, a 7% increase over the past month. Their combined holdings total $359.7 billion worth of Bitcoin.
Market Performance Context
While Bitcoin recently rebounded above $106,000 after a week of losses, meme coins like Dogecoin (DOGE) and Pepe (PEPE) have outperformed it in daily gains. Kendrick maintains bullish long-term predictions for Bitcoin, including a $500,000 price target by the end of a potential second Trump term, despite his treasury strategy warnings.
