The increasing trend of corporations allocating portions of their treasury to Bitcoin (BTC) has been a notable feature of the cryptocurrency market, largely influenced by pioneers like MicroStrategy. While this corporate adoption has historically provided significant buying pressure, a recent analysis by Standard Chartered suggests a potential downside: these very holdings could become a source of considerable selling pressure if market conditions deteriorate.
Standard Chartered Warns of Reversal Risk
A report from Standard Chartered, featuring insights from analyst Geoff Kendrick, indicates that the current accumulation of Bitcoin by non-crypto businesses might pose a risk to its price stability. While these corporate acquisitions have fueled upward momentum, the same flow could reverse direction if Bitcoin’s value declines, potentially leading to forced liquidations.
The bank’s monitoring indicates that a collective of firms holds close to 100,000 bitcoins, often acquired at prices higher than MicroStrategy’s average. Kendrick emphasizes that many of these companies may not withstand a sustained market downturn. He warns that a drop of more than 22% from their average entry prices could compel them to sell their holdings.
Critical Thresholds and Corporate Resilience
The study estimates that approximately half of these corporate holders would face losses if Bitcoin’s price dips below $90,000. This level is identified as a potential psychological trigger that could accelerate sell-offs.
Kendrick contrasts this situation with MicroStrategy’s behavior during the November 2022 FTX collapse, when Bitcoin fell sharply. MicroStrategy largely maintained its positions, possibly because the dollar value of their losses was manageable, and at that time, spot Bitcoin ETFs were not available, making MicroStrategy a unique investment vehicle for exposure to BTC. However, the current environment is different. With more liquid crypto investment products now accessible, Kendrick believes that newer corporate entrants are unlikely to endure a 50% drop from their purchase prices as MicroStrategy did.
The analysis specifically examines 61 non-financial companies that acquire Bitcoin for their balance sheets without direct involvement in the crypto industry. This group collectively owns about 673,897 bitcoins, which represents roughly 3.2% of Bitcoin’s total supply. Should a significant portion of this volume be released onto the market, the potential for downward pressure would be substantial.
Blockchain developer and writer, Daniel combines hands-on coding experience with accessible storytelling. He holds multiple blockchain certifications and authors technical explainers, protocol deep-dives, and developer tutorials to help readers navigate the intersection of code and finance.