Listed companies are facing increased losses due to their Bitcoin (BTC) holding strategy as the value of cryptocurrency plummets.
As BTC drops below $80,000, the debate about the risks of corporate digital currency investment has reignited.
Bitcoin Holding Strategy, Counterproductive for Companies?
This week marked a gloomy start for the cryptocurrency market. Many are calling it a "Black Monday". According to BeInCrypto data, Bitcoin plunged 9.6% in the past 24 hours, falling to $75,089 at the time of writing.
Liquidation figures are equally shocking. According to Coinglass, Bitcoin experienced the most liquidations during the same period, totaling $474 million. Of this, $405.7 million came from long position liquidations, and $68.2 million from short position liquidations.
Importantly, Bitcoin-holding companies are not exempt from the recent market collapse. Many companies are facing significant unrealized losses amid Bitcoin's sharp decline.
According to Bitcoin Treasury data, the NGU ratio, which measures the difference between the value of corporate Bitcoin holdings and their cost basis, has turned negative for many companies.
This indicates that the current Bitcoin market price is lower than the purchase cost for many institutional investors. For example, Metaplanet (3350.T) is experiencing 12.4% unrealized losses from Bitcoin holdings. The company currently holds 4,206 Bitcoins, valued at approximately $314.7 million, with an average cost per Bitcoin of $85,483.
Similarly, the Blockchain Group (ALTBG.PA)'s portfolio has dropped 14.4%. It holds 620 Bitcoins, valued at $46.39 million, with an average cost per Bitcoin of $87,424.
Semler Scientific (SMLR) also suffered a 14.7% loss. The company holds 3,192 Bitcoins, valued at $238.9 million, with an average cost per Bitcoin of $87,850.
Even early Bitcoin adopter MicroStrategy (MSTR) is facing challenges. Since starting Bitcoin purchases in August 2020, the company holds 528,185 Bitcoins, valued at $39.5 billion, with an average cost per Bitcoin of $67,485, showing an overall 10.9% profit.
However, according to Saylor Tracker data, all Bitcoins purchased by the company since November 2024 are currently at a loss. These purchases were made at prices ranging from $83,000 to $106,000 per Bitcoin.
Meanwhile, the decline in Bitcoin value has significantly impacted company stocks. 3350.T saw a 20.2% plunge, while ALTBG.PA dropped 15.8%.
SMLR experienced a slight 0.6% decline, still reflecting the overall market trend. Lastly, MSTR dropped 11.2% in pre-market trading, despite initial resistance.
Amid this market collapse, economist and long-time Bitcoin skeptic Peter Schiff criticized MicroStrategy.
"Hey Saylor, Bitcoin is below $80,000. If you want to prevent it from falling below your average cost of $68,000, go fill up trucks with borrowed money and invest it all," he posted on X.
The economist also predicted that the company's Bitcoin strategy could lead to bankruptcy.
"It will end in bankruptcy for MSTR," Schiff said.
He also questioned Bitcoin's value as a safe asset. Schiff emphasized that the significant decline compared to other assets highlights its unreliability as a store of value, especially during market sell-offs.
