The surge in Bitcoin, Ethereum, and other corporate crypto holdings significantly contributed to the market’s impressive gains over the summer. However, their decelerating growth has been a major factor in dragging down prices already affected by inflation and broader economic uncertainties.
This reduced activity from treasuries might continue to impact markets with heightened volatility expected in the short term, according to three market analysts who spoke with Decrypt.
“When treasuries cease purchasing, it removes a crucial demand support and weakens confidence in using balance sheets as a strategic tool,” Joe DiPasquale, CEO of crypto fund manager BitBull Capital, conveyed via text message to Decrypt. “Simultaneously, forced liquidations in derivatives and an overall risk-averse sentiment have hastened the decline. This creates a feedback loop that exerts pressure on both cryptocurrencies and related equities.”
Bitcoin was recently trading around $109,400, experiencing more than a 5% drop over the past week, according to CoinGecko data. On Friday, its value fell below $109,000 for the first time since September 1st. Ethereum along with other significant altcoins have also experienced substantial declines.
The recent downturns coincide with Bitcoin treasury purchases plummeting to just 12,600 BTC in August and 15,500 so far this month—a combined total less than half of what companies acquired back in July as per CryptoQuant analytics.
“We’ve observed treasury accumulations slowing compared to summer when firms were buying at unprecedented rates,” Michael McCluskey—CEO of Sologenic which provides decentralized exchange services—shared with Decrypt. “This slowdown aligns logically with softer Bitcoin prices given how much corporate demand was bolstering the market.”
McCluskey further noted: “In absence of consistent buying activity short-term exposure leaves markets vulnerable.”
A number of treasury firms’ stock values have nosedived during this period—with Solana-focused Helius Medical Technologies dropping by 38% last week while Ethereum-centric BitMine Immersion declined over 13% within same timeframe.
Pioneers like Strategy—the originator behind pivot-to-crypto accumulation—and Metaplanet each saw about nine percent decreases despite Japan-based Metaplanet acquiring more than five thousand four hundred BTC on Monday followed by favorable analyst ratings next day . Companies such as Helius raising funds through private placement public equity (PIPE) deals are trading well below their issue prices now .
Looking ahead , some treasuries may face additional hurdles , reported Thursday The Wall Street Journal noting financial regulators investigating unusually high trade volumes alongside dramatic share price increases among them .
Yet Gerry O’Shea head global insights Hashdex wrote text Decrypt suggesting potential end year rally pushing Bitcoin towards $140k or higher driven largely corporate adoption amid near term investor scrutiny strategy volatility challenges faced publicly traded entities involved space today !