Blockchain author and Columbia Business School adjunct professor Omid Malekan argues that any conversation about Bitcoin’s price decline should include the impact of crypto treasury firms, which have contributed to the decline.
“DAT must be included in any analysis of why crypto prices continue to fall.” [digital asset treasuries]“Overall, they turned out to be a mass mining and exit event, which was the reason for the price decline,” Malekan said in an X post on Tuesday.
“There are several companies that are trying to create sustainable value, you can count them on one hand,” he added.
Bitcoin (BTC) has fluctuated between $99,607.01 and $113,560 over the past seven days, down from a high of over $126,000 on October 6, according to CoinGecko, with analysts citing U.S.-China trade tensions and other macroeconomic factors as reasons for the crypto market decline.
Companies that are causing problems for the wrong reasons
Many crypto buying companies are able to raise millions of dollars from investors looking for exposure to cryptocurrencies, and some people starting crypto treasury companies see this model as a “get-rich-quick scheme,” Malekan claimed.
“Starting up any kind of public organization is expensive,” he added. “The funding required for a shell/PIPE/SPAC is in the millions of dollars, as are the fees paid to all bankers and lawyers involved.”
“The money spent on these fees had to come from somewhere,” he said.
Cryptocurrency treasury companies have used leverage through stock sales, convertible debt, and bond issuances to acquire significant supply of tokens across top cryptocurrencies, raising concerns that leveraged companies could further exacerbate the market downturn through forced sales of assets.
Some companies are trying to lure investors by generating yield from their holdings through means such as staking, while others are flagging plans to deploy some of their holdings into crypto protocols for lending or liquidity purposes.
“The biggest damage DAT did to the total crypto market capitalization was by providing a mass exit event for tokens that were supposed to be locked,” Malekan argued. “I’m still surprised that more other investors weren’t upset about this.”
He added, “Raising too much money and minting too many tokens, even if they are locked down or for ecosystem growth, is a recipe for gangrene in cryptocurrencies.”
Related: Are struggling companies using crypto reserves as a PR lifeline?
Cryptocurrency treasury trends will explode in 2025
The number of crypto treasuries has exploded this year, with an October report from asset management firm Bitwise tracking 48 new companies that have added Bitcoin to their balance sheets, bringing the total to 207, revealing that they collectively hold more than 1 million tokens worth $101 billion.
At the same time, Ether (ETH), the second most adopted cryptocurrency by Treasurys, was added to the balance sheets of 70 companies, according to data from Strategic ETH Reserve. In total, they hold 6.14 million ether, worth more than $20 billion.
Analysts told Cointelegraph that DAT will likely begin to consolidate under a few larger companies as the cycle matures and companies look to attract investors, although some speculate that this trend could lead to companies expanding into other areas of Web3.
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