The increase in companies purchasing Bitcoin has been a positive factor for the market, but Standard Chartered Bank noted in a report that a significant drop in prices could lead to the risk of forced liquidation.
Currently, 61 listed companies hold a total of 673,897 BTC, which is about 3.2% of the total supply.
The report warns that there is a risk of forced liquidation if the price falls more than 22% below the average purchase price.
The movement of companies using Bitcoin (BTC) as reserves is currently a factor driving up prices. However, a significant drop in prices could lead to the risk of forced liquidation, as noted by Standard Chartered analyst Geoff Kendrick in a report released on the 3rd.
According to the report, 61 listed companies have adopted Bitcoin as reserves, holding a total of 673,897 BTC as of the end of May 2024, which accounts for approximately 3.2% of the total Bitcoin supply.
Of course, the majority is held by Michael Saylor, who leads the Strategy, with a holdings of 589,55 BTC.
"Based on the case of Core Scientific in 2022, if the average purchase price falls below 22%, there is a possibility of being forced to sell," wrote Kendrick, the head of digital asset research at the firm.
In the bearish market of 2022, Bitcoin mining company Core Scientific faced financial pressure, selling 7,202 BTC at an average of $23,000 in June, raising approximately $167 million.
"This forced sale price (where 'forced' refers to a situation where creditors stop funding the company's business model) was just 22% below the mining cost" (Mr. Kendrick)
He further warned that if the price of Bitcoin falls below $90,000, half of the companies that purchased Bitcoin as reserves would fall into the red.
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Bitcoin Holdings Companies May Become "Sellers" Tomorrow: Standard Chartered Bank | CoinDesk JAPAN
The movement of companies using Bitcoin (BTC) as reserves is currently a factor driving up prices. However, a significant drop in prices could lead to the risk of forced liquidation, as noted by Standard Chartered analyst Geoff Kendrick in a report released on the 3rd.
According to the report, 61 listed companies have adopted Bitcoin as reserves, holding a total of 673,897 BTC as of the end of May 2024, which accounts for approximately 3.2% of the total Bitcoin supply.
Of course, the majority is held by Michael Saylor, who leads the Strategy, with a holdings of 589,55 BTC.
"Based on the case of Core Scientific in 2022, if the average purchase price falls below 22%, there is a possibility of being forced to sell," wrote Kendrick, the head of digital asset research at the firm.
In the bearish market of 2022, Bitcoin mining company Core Scientific faced financial pressure, selling 7,202 BTC at an average of $23,000 in June, raising approximately $167 million.
"This forced sale price (where 'forced' refers to a situation where creditors stop funding the company's business model) was just 22% below the mining cost" (Mr. Kendrick)
He further warned that if the price of Bitcoin falls below $90,000, half of the companies that purchased Bitcoin as reserves would fall into the red.
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