Today’s Corporate Bitcoin Holders Could be Tomorrow’s Forced Sellers: StanChart

Corporate bitcoin holdings are significantly impacting the cryptocurrency market, but a substantial price drop could trigger widespread liquidations, warns Standard Chartered analyst Geoff Kendrick. His research report reveals that 61 publicly traded companies have adopted bitcoin as a treasury asset, collectively owning 673,897 BTC—approximately 3.2% of the total bitcoin supply. This figure is heavily skewed by MicroStrategy (MSTR), holding a massive 580,955 BTC.

Kendrick’s analysis uses Core Scientific (CORZ) as a case study. In 2022’s bear market, Core Scientific, facing financial distress, offloaded 7,202 BTC at an average price of $23,000, raising roughly $167 million. Crucially, this sale price was only 22% below their acquisition cost, highlighting the potential for forced liquidations even with relatively minor price declines.

This precedent suggests that a bitcoin price drop exceeding 22% below the average purchase price for these corporate treasuries could prompt similar sell-offs. Kendrick estimates that if bitcoin falls below $90,000, approximately half of these corporate bitcoin holdings would be underwater, creating a significant selling pressure. This scenario underscores the inherent risk associated with holding bitcoin as a treasury asset.

The substantial volume of bitcoin held by corporations, particularly the concentration in MicroStrategy’s holdings, presents a double-edged sword. While adding to current buying pressure, it also creates a potential catalyst for a dramatic price correction should market conditions deteriorate. The vulnerability of these corporate treasuries to price fluctuations highlights the need for careful risk management and diversification strategies within these corporate investment portfolios. The potential for a cascading effect, triggered by a single major liquidation, cannot be ignored. This scenario warrants close monitoring of both the bitcoin price and the financial health of these publicly traded firms holding significant bitcoin reserves. Bernstein’s projection of an additional $330 billion inflow into corporate bitcoin treasuries by 2029 further complicates the risk assessment.