“It was inevitable,” Jake Ostrowski, head of OTC trading at Wintermute, said, referring to the selloff in digital asset treasury shares. “It got to the point where their numbers became too numerous.”
Many companies have begun selling their crypto reserves in an effort to fund share buybacks and boost their stock prices, turning the crypto treasury model upside down.
North Carolina-based ether holder FG Nexus recently sold approximately $41.5 million of its tokens to finance its share buyback program. Its market cap is $104 million, while the value of the crypto it holds is $116 million. Florida-based life sciences company turns ether buyer EThzilla recently sold approximately $40 million worth of tokens to fund its share buyback program.
French semiconductor company Sequential Communications sold about $100 million of its bitcoin this month to repay its debt, a sign that some companies that borrowed for crypto purchases are now struggling. Sequence has a market capitalization of $87 million, while the Bitcoins it holds are worth $198 million.
Sequance chief executive Georges Karam said the sale was a “strategic decision aimed at unlocking shareholder value given the current market conditions.”
According to Morgan McCarthy, while Bitcoin and Ether sellers may find buyers, companies with more niche tokens will find it more difficult to raise money from their holdings. “When you get a medical device company buying some long-tail asset in crypto that has a niche in a specific market, it’s not going to end well,” he said, adding that 95 percent of digital asset treasuries “will go to zero.”
Meanwhile, the strategy has doubled down and bought even more Bitcoin as the token’s price has dropped to $87,000 from $115,000 a month ago. The company is also facing fears of cuts from some major equity indices, which could add even more selling pressure to the stock.
But Saylor dismissed any concerns. “Volatility is Satoshi’s gift to the faithful,” he said this week, referring to Bitcoin’s pseudonymous creator.
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