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Standard Chartered analyst warns that nearly half of Bitcoin treasuries held by non-crypto companies could face liquidation if Bitcoin’s price drops below $90,000.
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Energy infrastructure firm SolarBank joins the growing list of public companies adopting Bitcoin treasury strategies, signaling increased corporate interest in cryptocurrency holdings.
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Geoffrey Kendrick of Standard Chartered highlights that the rising average purchase price of Bitcoin by corporate treasuries raises risks amid Bitcoin’s inherent price volatility.
Standard Chartered flags risks as non-crypto firms increase Bitcoin holdings; half of corporate treasuries may liquidate if BTC falls below $90K amid rising volatility.
Corporate Bitcoin Treasuries Face Liquidation Risks Amid Rising Average Purchase Prices
In recent months, a surge in non-crypto public companies accumulating Bitcoin has prompted concerns from financial analysts. According to Geoffrey Kendrick, Global Head of Digital Assets Research at Standard Chartered, many of these companies have purchased Bitcoin at significantly higher prices than early adopters like Strategy. This has resulted in an average cost basis that places nearly 50% of corporate Bitcoin treasuries at risk of being underwater if Bitcoin’s price dips below $90,000. Such a scenario could trigger forced liquidations, potentially exacerbating downward price pressure.
SolarBank’s Entry Signals Growing Corporate Adoption of Bitcoin Treasury Strategies
SolarBank, a Canadian energy infrastructure firm specializing in solar energy and battery storage, recently announced plans to incorporate Bitcoin into its balance sheet. Although the company has not disclosed the size or timing of its Bitcoin acquisition, this move reflects a broader trend among public companies seeking to diversify assets with cryptocurrency holdings. Data from bitcointracker.net indicates that 223 entities currently hold Bitcoin, with combined holdings valued at approximately $359.7 billion. This represents a 7% increase in the number of holders over the past month, underscoring accelerating institutional interest.
Market Implications of Corporate Bitcoin Treasury Strategies
Kendrick’s analysis suggests that while corporate Bitcoin purchases currently contribute to buying pressure, the elevated average purchase prices and Bitcoin’s inherent volatility pose significant risks. He warns that price fluctuations could push Bitcoin below many companies’ purchase prices, leading to liquidation events that may reverse the current bullish momentum. Additionally, the removal of market inefficiencies—such as regulatory constraints and conservative investment policies—could further influence Bitcoin’s price dynamics as corporate treasuries expand.
Bitcoin’s Price Trajectory and Analyst Outlook
Bitcoin recently traded around $106,000, following a record high exceeding $112,000 earlier this month. This price surge coincided with notable events, including a private dinner hosted by former U.S. President Donald Trump with holders of his meme coin, Official Trump. Despite the risks highlighted, Kendrick maintains a bullish long-term outlook, projecting Bitcoin could reach $500,000 by the end of President Trump’s second term. This forecast underscores the complex interplay between short-term volatility and long-term growth potential in the cryptocurrency market.
Conclusion
The increasing adoption of Bitcoin treasury strategies by non-crypto companies marks a significant shift in institutional investment behavior. However, as Standard Chartered’s analysis reveals, the elevated average purchase prices and Bitcoin’s volatility introduce substantial liquidation risks that could impact both corporate balance sheets and broader market dynamics. Investors and companies alike should monitor these developments closely, balancing the potential rewards of Bitcoin exposure with prudent risk management strategies.
