Data shows the Bitcoin price decline has left the majority of treasury companies in a state of loss, with 65% sitting more than 20% below cost basis.
Over 77% Of Bitcoin Treasury Firms Are Underwater On Their Buys
As pointed out by Capriole Investments founder Charles Edwards in a new post on X, a high amount of Bitcoin treasury companies are sitting on losses at the moment. Treasury companies refer to firms that keep BTC on their balance sheet as a reserve asset. Companies of this type that are publicly traded do so to allow their investors indirect exposure to the digital asset via their stock.
The approach was popularized by Michael Saylor’s Strategy (previously MicroStrategy), which has amassed a humongous Bitcoin stack after its consistent accumulation over the years. During the past few months, BTC has observed a bearish shift, so these firms have naturally been impacted. Below is the chart shared by Edwards that shows the trend in the percentage of such companies that are underwater on their BTC buys.
Companies have increasingly gone underwater as the bearish momentum has advanced | Source: @caprioleio on X
As is visible in the graph, the total percentage of Bitcoin treasury firms in loss has gone up recently, with its value today sitting at 77.4%. Thus, it would appear that a strong majority of the companies have their holdings below their cost basis. This includes Strategy, which has an average acquisition level of $75,985, more than 12% above the current spot price.
A large percentage of the firms are in even worse losses than Strategy. In the same chart, data for the treasuries with holdings sitting more than 20% below their cost basis is also displayed. It would appear that this metric has a value of 65.6%, implying that less than 12% of the underwater companies are in losses smaller than 20%.
From the graph, it’s also apparent that the recent trend in the treasury firms resembles that of May 2022, when the bear market of that year was in full swing. Back then, the percentage figure eventually went on to touch even higher highs.
Like how public treasury companies provide for an indirect route into Bitcoin, there is also another such indirect means in the market available today: the spot exchange-traded funds (ETFs). These funds buy and hold the asset on behalf of their users, allowing them to get exposure to BTC’s price movements without having to deal with blockchain elements.
The bearish market shift also caused the US spot ETFs to face net outflows, as data from SoSoValue shows. During the last couple of weeks, however, inflows have poured into these funds, implying that demand for Bitcoin may be starting to return.
How the weekly netflow related to the spot BTC ETFs has changed over the last couple of years | Source: SoSoValue
BTC Price
Bitcoin has retraced its recovery during the past few days as its price is back at the $67,600 mark.
The trend in the price of the coin over the last five days | Source: BTCUSDT on TradingView
Featured image from Dall-E, chart from TradingView.com
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