The data shows that the decline in the price of Bitcoin has left most of the treasury companies in a loss position, with 65% sitting more than 20% below its original value.
More than 77% of Bitcoin treasury companies are flooded with their purchases
As Capriole Investments founder Charles Edwards pointed out in a recent post on X, a large number of Bitcoin treasury companies are currently sitting at a loss. Treasury companies refer to companies that hold BTC on their balance sheets as a reserve asset. Companies of this type that go public do so to give their investors indirect exposure to digital assets through their shares.
This approach has been popularized by Michael Saylor Strategy (formerly MicroStrategy), which has amassed a large bitcoin stack after its steady accumulation over the years. Over the past few months, BTC has seen low volatility, so these companies have naturally been affected. Below is a chart of Edwards Exchange, which shows the trend of the percentage of such companies that are flooded when buying BTC.
Companies have increasingly gone underwater as the bearish momentum has advanced | Source: @caprioleio on X
As can be seen in the graph, the total percentage of Bitcoin treasury companies has increased recently and its value today is 77.4%. Thus, it appears that most companies are holding their shares below their value. This strategy includes an average buy level of $75,985, which is more than 12% above the current spot price.
A large percentage of companies have even worse losses than the Strategy. The same chart also shows data on funds with assets more than 20% below their value. It appears that this indicator is worth 65.6%, which means that less than 12% of underwater companies suffer less than 20%.
From the graph, it is also clear that the most recent trend of treasury companies is similar to May 2022, when the bear market was at its peak that year. At that time, interest rates had finally reached their all-time highs.
Similar to how public treasury companies provide an indirect route to Bitcoin, there is another indirect instrument on the market: spot exchange-traded funds (ETFs). These funds buy and hold assets on behalf of their users, allowing them to be exposed to BTC price movements without having to deal with blockchain elements.
The market volatility also caused U.S. ETFs to face net outflows, as data from SoSoValue shows. However, over the past two weeks, inflows have poured into these funds, which means that demand for Bitcoin may begin 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 over the past few days as its price has returned to $67,600.
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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