The rise in Bitcoin, Ethereum, and other corporate crypto treasuries helped fuel the summer’s massive market gains. Now their slowing growth has played a large role in sapping prices already sensitive to inflation and other macroeconomic uncertainties.
The treasuries’ waning activity could continue to weigh on markets with volatility likely to remain heightened in the near-term, three market observers told Decrypt.
“When treasuries stop buying, it removes an important demand floor and undermines confidence in the balance-sheet-as-strategy narrative,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote in a text to Decrypt. “At the same time, forced liquidations in derivatives and broader risk-off sentiment have accelerated the decline, creating a feedback loop that pressures both crypto assets and the equities tied to them.”
Bitcoin was recently trading at about $109,400, off more than 5% over the past week, according to crypto markets data provider CoinGecko. At one point Friday, the largest cryptocurrency by market value dropped below $109,000 for the first time since September 1. Ethereum and other major altcoins have also fallen deeply into negative territory.
Those latest declines have come as Bitcoin treasury buys have plummeted to just 12,600 BTC in August, and 15,500 so far this month—a combined total that is less than half the amount that firms acquired in July, according to data analytics provider CryptoQuant.
“We’ve seen treasury accumulations cool off compared to the summer, when companies were buying at a record pace,” Michael McCluskey, CEO of Sologenic—which offers a decentralized exchange and related services—told Decrypt. “That slowdown has coincided with softer prices in Bitcoin and other major cryptocurrencies, which makes sense given how much corporate demand was propping up the market.”
McCluskey added: “In the short term, the absence of steady buying leaves the market more exposed to volatility.”
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