$BTC Welcome to the morning cryptocurrency news brief in the United States - your essential summary of the key developments in cryptocurrencies for the upcoming day.
Grab a cup of coffee to read what Standard Chartered thinks about the key levels to watch as the next directional bias for Bitcoin's price remains.
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Mysterious. The leading cryptocurrency recently reclaimed the $105,000 barrier after dipping to the $103,000 range and is now filling a symmetrical triangle.
Today's cryptocurrency news: Standard Chartered points to risks in corporate Bitcoin treasuries
Standard Chartered warned of an increasing risk in corporate adoption of Bitcoin, cautioning that balance sheet holdings may shift from upward support to a source of downward pressure.
According to Jeff Kendrick, head of digital asset research, 61 publicly listed companies now hold 673,897 BTC. This represents about 3.2% of Bitcoin's total final supply.
While these corporate treasuries have added to the demand for Bitcoin, Kendrick says many of them are now vulnerable to price volatility.
"Bitcoin treasuries are adding to the buying pressure on Bitcoin right now, but we see a risk that this may reverse over time," Kendrick said in an email to BeInCrypto.
The specific concern is that many companies bought Bitcoin at high prices, leaving them exposed if prices significantly decline.
Specifically, a large portion of this BTC was purchased at average buying prices above $90,000, which is risky given the current market volatility.
According to the CEO of Standard Chartered, the trend may reflect previous liquidations such as the collapse of Core Scientific in 2022.
Kendrick stated that companies typically face pressure when Bitcoin drops 22% below their cost basis.
"We identify the pain threshold at 22% below the average purchase price as a potential liquidation level," he clarified, referencing the collapse of Core Scientific in 2022 as a precedent.
The closure of the critical candle below the lower trend line or the upper limit of the symmetrical triangle can determine Bitcoin's next directional bias.
MicroStrategy leads, but "imitators" face greater risks
At the same time, MicroStrategy (now Strategy) remains the dominant force in the Bitcoin treasury sector.
The company holds about 86% of all Bitcoin held by corporations, with an average purchase price of $70,000. BeInCrypto reported its latest purchase in a recent cryptocurrency news publication.
However, Kendrick confirmed that newcomers, referred to as "MSTR imitators," have doubled their collective holdings over the past two months, owning just under 100,000 Bitcoins.
Unlike MicroStrategy, many of these companies bought at higher prices, increasing their exposure.
"Most corporate Bitcoin treasuries in our sample, 58 out of 61, have NAV multiples above 1. Right now, we believe this is justified due to market inefficiencies, including regulatory hurdles to access investors and conservative investment committee processes," Kendrick explains.
Accordingly, he warned that as these efficiencies erode over time, the positive pressure from corporate buyers is likely to fade.
In his opinion, this will leave a void that may accelerate the market's decline.
"Corporate treasuries can shift from a source of upward buying pressure to a driver of volatility and downside risk," he concluded.
The future of Bitcoin is increasingly tied to board decisions and balance sheet allocations. In this context, corporate behavior may now have a greater impact on the cryptocurrency market than ever before.
It's worth noting that Kendrick's concerns align with those of prominent Bitcoin maximalist Max Keiser. The recent cryptocurrency news publication highlighted Keiser's view that following MicroStrategy may backfire for Jack Mallers' Twenty One Capital.
"There is a significant difference between a company with a Bitcoin treasury strategy and a Bitcoin strategy... Twenty One Capital is a company looking to buy a lot of Bitcoin, which is extremely volatile. I doubt their ability to exploit this volatility effectively as Strategy does... A Bitcoin strategy company is inherently riskier, with no clear path to be competitive like Strategy in taking advantage of market volatility to capture more Bitcoin," Kaiser told BeInCrypto.
According to Kaiser, MicroStrategy will remain the biggest winner, with dozens of imitators trying to catch up but failing to achieve the same returns. Stephen Lobka, head of Swan Private Wealth, took a similar stance.
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