Love of risk. Bitcoin recently reached a new historic summit, exceeding $ 112,000, and with it, business interest in digital assets continues to grow. However, according to Geoffrey Kendrick of Standard Chartered, this trend could include significant risks for companies that follow the strategy of strategy by adding bitcoin to their cash. Here is why.
- Bitcoin recently reached a historic summit, exceeding $ 112,000, arousing an increasing enthusiasm of companies for this digital asset.
- Geoffrey Kendrick of Standard Chartered has issued warnings concerning risks for companies that follow the Bitcoin accumulation strategy, especially if the price falls under 90,000 dollars.
Some companies accumulate bitcoin …
Stratum opened the way a few years ago by massively accumulating bitcoin, and many companies have followed this example. According to data of Bitcoin Treasuries223 entities now hold bitcoinswith a combined value of $ 359.7 billion. Among them, giants like Tesla and Block Inc. also adopted this strategy.
Recently, Solarbank, a Canadian company specializing in solar energy, announced its intention to add BTC to his cash, thus joining the growing list of public enterprises that accumulate cryptocurrency.
But beware, however, to the false good idea! Geoffrey Kendrickglobal manager of digital asset research at Standard Charterd, warns against risks associated with this strategy. In a note addressed to investors and taken up by the presshe stresses that companies that imitate Strategy have doubled their BTC assets in the past two months, reaching near 100,000 BTC.
… But it is a risky strategy for Standard Chartered
The problem, according to him, is that these companies have bought from much higher average price that Michael Saylor. Consequently, if the price of Bitcoin fall below $ 90,000about half of the cash flows held by 61 public companies not linked to the crypto would be downright « Underwater ».
Finally, Geoffrey Kendrick believes that a fall of 22 % of the price of Bitcoin compared to means of means purchase could lead to Massive liquidations.
The volatility of Bitcoinwell known to investors, is therefore both a opportunity, but also a risk. While some see it a coverage against inflation and a reserve of value, its volatility can also jeopardize companies that use it as Treasury active.
While more and more companies are adopting Bitcoin, the Chartered Standard warnings recall that this strategy has risks. The volatility inherent in Bitcoin can transform a strategic and hyper profitable investment into a risky bet, Especially if the market experiences a significant correction. Will companies have diamond hands or will they have to sell when returning from Bear Market ? This is the question asked by Mr. Kendrick.