Bitcoin Holdings at Risk: Corporate Treasuries Face Forced Liquidation Threat

Bitcoin Holdings at Risk: Corporate Treasuries Face Forced Liquidation Threat

A growing number of publicly listed companies are holding Bitcoin on their balance sheets, but Standard Chartered warns that price volatility could soon trigger a wave of forced liquidations if conditions deteriorate. In a recent report, the bank’s digital assets analyst Geoff Kendrick highlights that if Bitcoin prices fall 22% below the average purchase price, many corporate treasuries may be forced to sell their holdings.

Currently, 61 companies classified as Bitcoin treasuries hold a combined 673,897 BTC, representing 3.2% of all Bitcoins that will ever exist. Half of these firms acquired their holdings at an average price above $90,000, making them particularly vulnerable to price drops. Kendrick points to the 2022 collapse of Core Scientific as a precedent, where the miner sold thousands of BTC when prices dropped 22% below its cash cost.

MicroStrategy, a pioneer in the corporate Bitcoin treasury model, holds 86% of the total reserves and has a lower average purchase price of $70,000, reducing its exposure. However, newer entrants are more at risk, with their holdings doubling in the last two months to nearly 100,000 BTC, often at higher average purchase prices.

The report also raises a longer-term structural concern. While current NAV multiples above 1 are sustained by limited investor access and institutional constraints, Standard Chartered expects these multiples to become unsustainable as ETF access improves, potentially putting downward pressure on the equity prices of Bitcoin holders.

Despite a constructive long-term outlook for Bitcoin, near-term volatility poses significant risks for corporate treasuries. Kendrick emphasizes that a price drop below $90,000 could push half of these companies underwater, testing their ability to withstand financial pain before being forced to liquidate their Bitcoin holdings.