“It was inevitable,” said Jake Ostrovskis, head of over-the-counter trading at Wintermute, referring to the sell-off in digital asset treasury shares. “It got to the point where there were too many of them.”
Several companies have begun selling their cryptocurrency holdings in an attempt to fund share buybacks and shore up their stock prices, essentially upending the crypto-treasury model.
North Carolina-based Ether holder FG Nexus recently sold approximately $41.5 million worth of its tokens to fund its share repurchase program. His market capitalization is $104 million and the value of the cryptocurrency he owns is $116 million. Florida-based ether buyer ETHZilla recently sold about $40 million worth of its tokens, also to fund its share buyback program.
Sequans Communications, a French semiconductor company, sold about $100 million worth of its bitcoin this month to service its debt, a sign that some companies that took out loans to finance cryptocurrency purchases are now struggling. Sequans has a market capitalization of $87 million and the Bitcoin it owns is worth $198 million.
Georges Karam, chief executive of Sequans, said the sale was a “tactical decision aimed at increasing shareholder value in the current market conditions.”
According to Morgan McCarthy, while sellers of bitcoin and ether may find buyers, companies with a large number of niche tokens will have a harder time raising money from their assets. “When you have a medical device company buying some long-tail cryptocurrency asset, a niche in a niche market, it’s not going to end well,” he said, adding that 95 percent of treasury digital assets “will go to zero.”
Meanwhile, Strategy doubled down and bought even more bitcoin as the token's price fell to $87,000 from $115,000 a month ago. The firm also faces the looming possibility of delisting from some major stock indexes, which could put further selling pressure on the stock.
But Sailor brushed aside any concerns. “Volatility is Satoshi’s gift to the believers,” he said this week, referring to Bitcoin’s pseudonymous creator.
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