Corporate Bitcoin Strategies Push Demand for Digital Gold, But Future Risks Loom

Acquiring the first cryptocurrency as a treasury asset amplifies buyer pressure, but this situation may shift over time. This warning was issued by Standard Chartered, as reported by Cointelegraph.

According to the bank’s analysis, 61 companies collectively hold 673,897 BTC on their balance sheets, which accounts for 3.2% of the total supply. Notably, 58 of these firms have a Net Asset Value (NAV) exceeding 1, meaning the market value of their Bitcoin holdings surpasses their book value.

Half of the corporations in this group have an average purchase price above $90,000, making them vulnerable should a market correction occur. This figure significantly exceeds the threshold set by Strategy at $70,023.

*“Currently, this is justified by market inefficiencies, including regulatory barriers limiting access for participants and the conservative processes of investment committees. However, as these barriers are lifted, the coins could exert downward pressure on prices and increase volatility,”* the report stated.

Experts also observed that the amount of Bitcoin acquired by these 61 companies doubled in two months—from under 50,000 BTC to approximately 100,000 BTC.

In this light, their purchasing pace exceeded that of Strategy, which added 74,000 BTC, compared to the 61 ‘imitators,’ who acquired 47,000 BTC, according to the analysts.

Previously, co-founder of Strategy Michael Saylor asserted that the company’s capital structure is designed to remain stable even if Bitcoin drops by 90% and stays at that level for four to five years.

The entrepreneur expressed confidence that the corporation’s valuation could eventually rise to $10 trillion.

According to Bernstein experts, the Bitcoin strategy is not suitable for every project; the best candidates are companies with slow growth rates and significant cash reserves.

Analysts predict that by 2029, organizations could increase their holdings of digital gold on their balance sheets to $330 billion, with Strategy maintaining a leading position in acquisitions.

Research from Sygnum indicates that institutional investors and corporations accumulating coins have resulted in a 30% decrease in liquid supply over the past 18 months. This scenario sets the stage for «demand shock and price volatility upward.»

Experts estimate that since late 2023, Bitcoin balances on exchanges have decreased by around 1 million BTC. This trend is accelerating as more funds issue shares or bonds to purchase the leading cryptocurrency, further consuming the available supply.

The favorable environment is bolstered by geopolitical and financial uncertainty, particularly concerning the weakening USD and rising US government debt.

Sygnum also highlighted the passage of laws to establish Strategic Bitcoin Reserves (SBR) in three American states, as well as similar signals from abroad, notably Pakistan and the UK.

Currently, the initiative has been approved in Texas, New Hampshire, and Arizona. Attempts to create SBR in Oklahoma, Montana, Pennsylvania, North and South Dakota, and Wyoming have failed.

While federal-level purchases for a strategic Bitcoin reserve have not yet occurred, experts believe that their initiation would act as a significant growth catalyst, particularly due to its signaling effect.

The instability in Traditional Finance (TradFi) is also fueling interest in the first cryptocurrency; in May, a wave of sales hit the US debt market, increasing the appeal of gold and its digital counterpart.

Experts also noted an improvement in Bitcoin’s volatility profile. Over the past three years, the upward volatility has outpaced the downward variant, signaling asset maturity and increasing participation from institutional investors.

It is important to recall that by 2045, companies holding Bitcoin reserves are projected to control 50% of the total supply of the first cryptocurrency, amounting to 21 million coins, according to Jess Meyers from Moon Inc.

Previously, Bernstein forecasted that the valuation of digital gold on corporate balance sheets could rise to $330 billion by 2029.