Crypto Treasury Firms Eye ‘Fire Sale’ as Market Drops

Companies that once hoarded cryptocurrency have reportedly begun unloading their holdings amid a market rout.

That’s according to a report Wednesday (Nov. 26) by the Financial Times (FT), which says this $1 trillion downturn has caused shares in Strategy, the world’s largest corporate bitcoin holder, to fall 50% in the last three months.

That in turn has dragged down other companies, wiping out $77 billion. That’s after a peak of $176 billion in July, the FT added, citing crypto industry data publication The Block.

With Strategy now worth less than the bitcoin it holds, the report added, investors are concerned that a business model that centered on a virtuous circle of increasing crypto prices and widescale share and debt issuance is now coming apart.

“There’s going to be a fire sale at these companies; it’s going to get worse,” said Adam Morgan McCarthy, senior research analyst at crypto data firm Kaiko. “It’s a vicious cycle. As soon as the prices start tanking, it’s a race to the bottom.”

As the report notes, Strategy had begun as a software business before its crypto pivot, inspiring copycats in a range of other industries.

“When you’ve got a medical device company buying some long-tail asset in crypto, a niche in a niche market, it is not going to end well,” said McCarthy, who projected that 95% of digital asset treasuries “will go to zero.”

Strategy, the report added, has purchased even more bitcoin, even as the price of the token has dropped from $115,000 to $87,000 in a matter of weeks. The company is also facing the threat of being dropped from some leading equity indices, though CEO Michael Saylor has dismissed any concerns.

“Volatility is Satoshi’s gift to the faithful,” he said this week, in reference to bitcoin’s creator.

Meanwhile, PYMNTS wrote earlier this week about the other crypto-related story playing out against the backdrop of the market downturn, with a “wave of infrastructure-focused announcements from payment giants, wallet providers, and ecommerce platforms” indicating that “while sentiment has cooled, the technical groundwork for everyday crypto spending is accelerating faster than ever.”

For example, cryptocurrency exchange Kraken recently introduced a Mastercard debit app in the U.K. and EU. Block, the payments company that owns Square and Cash App, now offers bitcoin payment capability for 4 million merchants through its Square Bitcoin feature. FinTech Klarna has just rolled out a payments stablecoin.

“For an industry long defined by dramatic boom-and-bust cycles, this quiet, infrastructure-heavy moment feels almost countercultural,” PYMNTS wrote.

“But it may be the most important step yet toward moving cryptocurrency from high-end novelty purchases like Ferraris and multimillion-dollar real estate into the ordinary, lower-margin world where most holiday sales happen.”