Standard Chartered Warns 61 Companies Risk 50% Bitcoin Loss

Standard Chartered has issued a warning about the increasing number of non-crypto public companies that are accumulating Bitcoin. The bank's digital asset research lead, Geoff Kendrick, expressed concern that these companies, which have doubled their Bitcoin holdings in the past two months, could face substantial risks if the market experiences a downturn. Kendrick cautioned that if the price of Bitcoin falls below $90,000, half of these companies would be in a loss-making position, potentially forcing them to sell their holdings. This scenario could lead to a market crash, as the selling pressure from these companies could overwhelm the market.

The bank is monitoring 61 companies that hold Bitcoin purely for investment purposes, excluding those directly involved in the crypto industry. These companies collectively own 673,897 Bitcoins, which represents approximately 3.2% of the total 21 million supply. Kendrick noted that unlike Strategy, which has been known for buying Bitcoin at lower levels, many of these newer entrants purchased at much higher prices. This makes them more vulnerable to price fluctuations and potential losses.

Kendrick also pointed out that regulatory restrictions and slow-moving investment policies have so far prevented these companies from becoming forced sellers. However, if these roadblocks are removed, there is a risk that these companies could turn into sellers, exacerbating the market downturn. He emphasized that none of the newer entrants would be able to withstand a 50% drop in Bitcoin prices below their average purchase price, as they lack the financial resilience and strategic purpose that Strategy had during the FTX collapse in November 2022.

The bank's warning comes at a time when corporate demand for Bitcoin has been driving the recent price rally. However, Kendrick cautioned that this buying pressure could reverse, leading to a market crash. He urged companies to carefully consider their Bitcoin holdings and the potential risks associated with them. The bank's warning serves as a reminder of the volatility and uncertainty in the crypto market, and the need for companies to exercise caution when investing in Bitcoin.