The Swiss digital asset bank Sygnum warned in its latest report on the 10th that the Bitcoin (BTC) holdings of Strategy Inc. have reached nearly 3% of the total supply (issued amount = 19,877,256 BTC), approaching a "problematic" level. The company has also set a target of acquiring 5%, which is seen as increasing concentration risk.
The report also analyzes the risks associated with the rapid increase of companies acquiring cryptocurrencies. These companies are purchasing Bitcoin through stock issuance and convertible bonds, aiming to increase the amount of BTC held per share. However, it is pointed out that there are limits to this strategy, and there is a risk that the stock price premium may disappear after demand saturation.
Sygnum points out that the strategy approach is not a corporate financial strategy, but an investment strategy. Strategy's core revenue is around $20 million a year, while its BTC holdings are over $60 billion, which is disproportionately large. In addition, it is said that investing with leverage is beyond the scope of the responsibility of the finance department.
Furthermore, it is warned that large-scale centralized holdings pose risks to the entire cryptocurrency market. A decrease in liquidity supply could lead to increased price volatility and may undermine the eligibility of cryptocurrencies as reserve assets for central banks. Additionally, concerns regarding "Michael Saylor's BTC sell-off" have been pointed out as potentially creating difficult situations for the market.
The company has also pointed out the risk of liquidating bitcoin in the past. In April, the contents of the SEC report attracted attention, but since convertible bonds are unsecured and there are no margin call conditions, the risk of immediate liquidation is low.
On the other hand, Chairman Sailor stated at the May conference that they could respond even if the stock price fell to 1 dollar. He emphasized the flexibility as a business entity, such as issuing preferred stocks and repurchasing common stocks. However, there remains a view that there are limits to fundraising due to ongoing stock dilution.
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Strategy Corp's Bitcoin holdings reaching 3% may hit "risk level" = Swiss Financial Institution report
The Swiss digital asset bank Sygnum warned in its latest report on the 10th that the Bitcoin (BTC) holdings of Strategy Inc. have reached nearly 3% of the total supply (issued amount = 19,877,256 BTC), approaching a "problematic" level. The company has also set a target of acquiring 5%, which is seen as increasing concentration risk.
The report also analyzes the risks associated with the rapid increase of companies acquiring cryptocurrencies. These companies are purchasing Bitcoin through stock issuance and convertible bonds, aiming to increase the amount of BTC held per share. However, it is pointed out that there are limits to this strategy, and there is a risk that the stock price premium may disappear after demand saturation.
Sygnum points out that the strategy approach is not a corporate financial strategy, but an investment strategy. Strategy's core revenue is around $20 million a year, while its BTC holdings are over $60 billion, which is disproportionately large. In addition, it is said that investing with leverage is beyond the scope of the responsibility of the finance department.
Furthermore, it is warned that large-scale centralized holdings pose risks to the entire cryptocurrency market. A decrease in liquidity supply could lead to increased price volatility and may undermine the eligibility of cryptocurrencies as reserve assets for central banks. Additionally, concerns regarding "Michael Saylor's BTC sell-off" have been pointed out as potentially creating difficult situations for the market.
The company has also pointed out the risk of liquidating bitcoin in the past. In April, the contents of the SEC report attracted attention, but since convertible bonds are unsecured and there are no margin call conditions, the risk of immediate liquidation is low.
On the other hand, Chairman Sailor stated at the May conference that they could respond even if the stock price fell to 1 dollar. He emphasized the flexibility as a business entity, such as issuing preferred stocks and repurchasing common stocks. However, there remains a view that there are limits to fundraising due to ongoing stock dilution.
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