Crypto Treasury Under Threat: Company Stocks Fall, Bitcoin Gets Cheaper - FT
Kyiv • UNN
Companies that based their business on mass bitcoin purchases have seen their stocks plummet, with their value sometimes falling below crypto assets. This is happening amid a bitcoin decline and doubts about the viability of the "crypto treasury."
Shares of companies that built their business model on mass bitcoin accumulation have suffered a serious collapse. Investors are increasingly doubting the viability of the so-called "crypto treasury," which just a few months ago seemed like a new trend for global markets. This is reported by the Financial Times, writes UNN.
Details
The world's largest corporate bitcoin holder, Strategy, lost 18% of its value last month, falling to its lowest level since April. This dragged down the shares of other companies that followed the strategy of its founder Michael Saylor, using raised funds to buy cryptocurrencies.
The Financial Times article states that some firms are now worth less than the bitcoin reserves in their portfolios. For example, the American bitcoin miner LM Funding America has an enterprise value of $23.5 million, while its crypto assets are estimated at $34 million. A similar situation is with Semler Scientific, whose market capitalization ($500 million) is less than the value of its bitcoin reserves ($557 million).
The collapse was particularly painful for new companies. Japan's Metaplanet lost 68% of its peak value since June, and Britain's Smarter Web Company lost 70%. Shares of other "newly minted" crypto companies, such as the American KindlyMD or the French Capital B, also collapsed by tens of percent.
Analysts warn: the market is "overheated" and weaker players may simply disappear.
This whole thing is starting to show big cracks. Some companies won't survive
The situation is also worsening due to the general decline of bitcoin: in the last month alone, its price has fallen by 9% from a high of over $124 thousand. According to Architect Partners, this year "treasury" companies have already raised about $73 billion for bitcoin purchases and another $38 billion for ether.
Recall
Since the beginning of September, bitcoin has fallen to a two-month low due to significant sell-offs from inactive "whale" wallets and a decrease in capital inflow to ETFs. This also coincided with seasonal caution, as September historically sees a decline.