Key Takeaways
- Technique now holds almost 3% of all bitcoin, elevating centralization issues.
- Sygnum warns leveraged company accumulation distorts liquidity and will deter central banks from holding bitcoin as a reserve asset.
- Market downturns might pressure massive holders to promote, amplifying volatility and undermining institutional adoption.
Regulated digital asset financial institution Sygnum has cautioned that bitcoin acquisition automobiles like Technique (previously MicroStrategy) are amassing outsized BTC holdings, probably making bitcoin unsuitable as a reserve asset for central banks.
Technique introduced on Monday the acquisition of a further 1,045 BTC for $110.2 million, bringing its whole to 582,000 BTC—equal to roughly 2.8% of bitcoin’s whole provide and valued at over $63 billion.
Sygnum analysts famous:
“Massive concentrated holdings are a danger for any asset and at this level Technique’s holdings are approaching some extent the place they change into problematic, with the corporate holding shut to three% of the full bitcoin ever issued, however a a lot greater share of the particular liquid provide”.
“A non-public company controlling a big portion of the prevailing provide would make bitcoin inappropriate for central banks to carry as a reserve asset.”
Shift from treasury technique to speculative automobiles
Sygnum highlighted the transformation of company bitcoin accumulation from a treasury hedge right into a speculative automobile, with corporations like Technique, Twenty One Capital, and Nakamoto Holdings leveraging debt to accumulate bitcoin at scales past their enterprise operations.
The financial institution warned that this mannequin reduces the liquid provide, distorts market volatility and liquidity, and crowds out smaller, extra measured company allocators.
Market dangers and sustainability
Whereas Michael Saylor asserts that Technique’s capital construction may stand up to a 90% bitcoin worth drop for as much as 5 years, Sygnum cautions that bear markets or fundraising challenges would possibly pressure leveraged corporations to promote, amplifying downturns. The development additionally dangers deterring central banks and establishments searching for prudent bitcoin allocations.
“These automobiles have catalyzed demand for bitcoin… Nevertheless, as demand ranges off and is saturated by elevated provide, the valuation of those shares relative to their bitcoin holdings is in danger. Moreover, these methods additionally create sure dangers for the crypto market as an entire.”