Public companies are actively buying bitcoin. And it is literally a hot trend at the moment. Even the media company of US President Donald Trump Trump Media and Technology Group (TMTG) announces plans to buy BTC for $2.5 billion. And the number of public companies creating bitcoin treasuries is only growing as the world’s most popular and pioneering cryptocurrency reaches historic highs. Digital gold has risen by 15% over the past three months, surpassing the growth of the MSCI World index by 3.6% and gold by 13.3%. And in general assets of 294 crypto funds reached a record high in May: $7.05 billion.
Companies are stockpiling bitcoin for various reasons: some hold it as a hedge against inflation or to show support for the cryptocurrency industry, which is being actively promoted by the new US government. Some firms have made using debt and stock sales to buy bitcoin their primary business strategy.
Should I run out and buy BTC? A significant increase in the share price of companies due to the acquisition of bitcoins may seem like a confirmation of a well-chosen strategy, but there are many risks. For example, a sudden drop in the price of BTC can lead to massive sell-offs. And this, in turn, cascades into an even stronger price drop and even more sales by smaller investors.
On the other hand, according to analysts at Ark Invest, by 2030, bitcoin will cost from $300 thousand to $1.5 million. But that’s not what we’re talking about…
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This is how many bitcoins belong to Strategy (former MicroStrategy) Michael Saylor. The company owns 2.77% of the total number of coins, which is 21 million. Thus, Strategy owns more bitcoins than all other companies combined. At the time of writing, the company’s assets are worth more than $63 billion.
Strategy first started buying bitcoin in 2020 from its reserve funds. Now its software development and support business is a small part of Strategy. The company uses everything from selling shares to issuing debt to replenish its bitcoin reserve regardless of the BTC price.
That’s how much Strategy’s share price has grown over the past five years, compared to about 1000% growth in bitcoin and 1500% in shares of stock favorite Nvidia.
Not the least role in the company’s success is played by the personality of founder and chairman Michael Saylor, who visited Trump at Mar-a-Lago and the White House and is known for his outrageous statements such as storage of cryptocurrencies in banks
Jeffrey Kendrick of Standard Chartered warned of potential risks associated with public companies that do not specialize in cryptocurrencies holding bitcoin in their treasuries.
If the price of bitcoin falls below $90 thousand, these companies may be forced to liquidate their assets, which could have significant consequences for the market. And if the price falls 22% below their average purchase price, they will most likely be forced to sell their holdings.
This warning comes as 61 public companies collectively hold 673,897 bitcoins, which is 3.2% of the total supply of bitcoins in circulation.
The concern is that the current pressure on buyers from these treasuries could be reversed if the price of bitcoin falls, leading to a potential market correction.
Shares of SharpLink Gaming, a gambling promotion firm, have surged 400% after it announced plans to buy Ethereum (ETH) for $425 million.
Shares of the crypto firm Upexi also rose by 300% after the announcement of the purchase of Solana (SOL) for $100 million.
after rumors of investing in cryptocurrencies. However, the securities fell by 10% after buying $500 million worth of bitcoin.
A newly created crypto company Nakamoto acquires KindlyMD, raises $710 million to replenish bitcoin coffers.
Metaplanet, which is ranked eighth in the global ranking of public companies with the largest bitcoin treasuries, release 555 million shares with a variable strike price. The company expects to raise $5.4 billion to buy additional BTC. This is the largest rights issue in the history of the Japanese stock market and the first time that the company has issued warrants
Microsoft also considered buying bitcoinbut abandoned the idea.
As a reminder, according to Bitwise, a cryptocurrency index fund management company, injections into Bitcoin could reach $120 billion by the end of 2025and an additional $300 billion in 2026.