As Bitcoin (BTC) adoption has been steadily increasing, led by major institutional bull MicroStrategy (Strategy), an increasing number of companies have started holding Bitcoin on their balance sheets in recent months. While this situation reveals increasing demand for BTC, Standard Chartered warned against this situation. If market conditions for Bitcoin and cryptocurrencies deteriorate, price volatility will increase, which could trigger a wave of forced liquidations, Standard Chartered warned in a note today. Standard Chartered digital assets analyst Geoff Kendrick noted that a “pain level of 22% below the average purchase price is a potential liquidation level” for companies holding Bitcoin. The bank listed 61 companies that hold Bitcoin treasuries. Stating that there are some that have nothing to do with cryptocurrencies but hold Bitcoin for balance sheet diversification, the bank stated that these companies have a total of 673,897 BTC, or 3.2% of the total Bitcoin supply. Kendrick noted that half of these firms purchased their BTC at an average price of over $90,000, potentially putting them at risk of liquidation if Bitcoin falls below $90,000. Citing Core Scientific, which collapsed in 2022, as an example for this situation, the analyst said the following. “These companies could become forced sellers if the Bitcoin price drops 22% below their average purchase price. At this point, $90,000 remains a critical level for these companies. Because it would only take the price of Bitcoin to fall back below $90,000 for half of the companies that bought Bitcoin to suffer losses. MicroStrategy, which leads the institutional Bitcoin strategy, holds the majority (86%) of BTC reserves and has a much lower average purchase price of around $70,000. However, Kendrick, who noted that new institutional participants are at greater risk, said: “In the last two months, there has been an increase in companies buying Bitcoin and the average purchase price is higher than MSTR. This means there is more risk.” Standard Chartered analyst Kendrick said the real question is how much pain companies can take before they have to sell their Bitcoin holdings. *This is not investment advice. Continue Reading: Bitcoin (BTC) Warning from Standard Chartered! "$90K is Very Critical!"
