Public companies are grappling with mounting losses from their Bitcoin (BTC) reserve strategies as the cryptocurrency’s value plunges.
This comes as BTC dropped below $80,000, sparking renewed debate over the risks of corporate investments in digital currencies.
Are Bitcoin Reserve Strategies Backfiring for Companies?
The week opened on a grim note for the cryptocurrency market, with many referring to it as a “Black Monday.” According to BeInCrypto data, Bitcoin saw a sharp decline of 9.6% in the past 24 hours, falling to $75,089 at the time of writing.
The liquidation figures have been equally staggering. According to Coinglass, Bitcoin experienced the highest liquidations in the same timeframe, totaling $474 million. Of that, $405.7 million came from long liquidations, while $68.2 million was from short liquidations.
Importantly, companies holding Bitcoin reserves have not been spared from the recent market bloodbath. Many now face significant unrealized losses amid Bitcoin’s sharp downturn.
According to data from Bitcoin Treasuries, the NGU ratio, which measures the difference between the current Bitcoin value and the cost basis of a company’s holdings, has turned red for many firms.
This indicated that the current market price of Bitcoin is now below the acquisition cost for many institutional investors. For example, Metaplanet (3350.T) is experiencing a 12.4% unrealized loss on its Bitcoin holdings. The company currently holds 4,206 Bitcoins, valued at approximately $314.7 million, with an average cost per Bitcoin of $85,483.
Similarly, The Blockchain Group’s (ALTBG.PA) portfolio is down 14.4%. Holding 620 Bitcoins valued at $46.39 million, the company’s average cost per Bitcoin is $87,424.
Semler Scientific (SMLR) has also felt the impact, with a 14.7% loss on its portfolio. The company holds 3,192 Bitcoins valued at $238.9 million, with an average cost of $87,850 per Bitcoin.
Even Strategy (MSTR), an early player in corporate Bitcoin adoption, is facing challenges. Since beginning its Bitcoin acquisition in August 2020, the company has accumulated 528,185 Bitcoins, valued at $39.5 billion, with an average cost of $67,485 per Bitcoin, resulting in an overall profit of 10.9%.
However, data from SaylorTracker reveals that all Bitcoin purchased by the firm since November 2024 is currently at a loss. These acquisitions were made at prices ranging from $83,000 to as high as $106,000 per Bitcoin.
Meanwhile, the decline in Bitcoin’s value has had a significant ripple effect on the firms’ stocks. 3350.T saw a sharp 20.2% drop in its stock price, while ALTBG.PA experienced a 15.8% decline.
SMLR experienced a smaller 0.6% dip but still reflected the broader market trend. Lastly, MSTR dropped 11.2% in pre-market trading despite some initial resilience.
Amid this market crash, Peter Schiff, economist and long-time Bitcoin skeptic, took aim at Strategy.
“Attention Saylor, now that Bitcoin is below $80,000, if you want to prevent it from crashing below your average cost of $68,000, you had better back up the truck with borrowed money today and go all in,” he posted on X.
The economist further predicted that the company’s Bitcoin strategy could lead to its downfall.
“It will end with the bankruptcy of MSTR,” Schiff stated.
He also questioned Bitcoin’s value as a safe haven asset. Schiff stressed that the coin’s substantial decline compared to other assets makes it an unreliable store of value, especially during market selloffs.
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