Omid Malkan, a blockchain author and assistant professor at Columbia Business School, says conversations about Bitcoin’s price decline should include the influence of cryptocurrency treasury companies, which have contributed to the decline.
“Any analysis of why crypto prices continue to decline must include DATs (digital asset vaults),” Malkan said. He said In X’s post on Tuesday. “All in all, it turned out to be a mass extraction and exodus – a reason for the decline in prices.”
He added that there are a few companies that have tried to “create sustainable value, but I can count them on the fingers of one hand.”
Analysts have blamed US-China trade tensions, along with other macroeconomic factors for the cryptocurrency market’s decline, which has seen Bitcoin (BTC) fluctuate between $99,607.01 and $113,560 over the past seven days, as it traded from its October 6 all-time high of over $126,000. According to That CoinGecko
Companies are in it for the wrong reasons causing the problem
Many cryptocurrency buyouts have raised millions from investors looking for exposure to cryptocurrencies, and Malkan claimed that some of the people who launched cryptocurrency treasury companies saw the model as a “get-rich-quick scheme.”
“It’s expensive to launch any kind of public entity,” he added. “The funds required for Shell/PIPE/SPAC run into the millions. So do the fees paid to all the bankers and lawyers involved.”
“The money spent on these fees had to come from somewhere,” he said.
Crypto treasury companies have acquired a large amount of digital currencies across top cryptocurrencies, using leverage through stock sales, convertible bonds and debt offerings to do so, raising concerns that leveraged companies could exacerbate the market decline through forced asset sales.
Others have sought to attract investors by generating a return on their holdings through measures such as staking, while some have indicated plans to deploy a portion of their holdings in cryptocurrency protocols for the purposes of lending and providing liquidity.
“The greatest damage DATs did to amassing crypto market cap was by providing a mass exit event for supposedly locked tokens,” Malkan claimed. “I’m still surprised that many other investors didn’t object to this.”
“Raising too much money and minting too many tokens even if they are locked or for the growth of the ecosystem is gangrene of cryptocurrencies,” he added.
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The crypto treasury trend will explode in 2025
The number of cryptocurrency treasuries has been on the rise this year, with an October report from asset manager Bitwise tracking 48 new instances of companies adding bitcoin to their balance sheets. the total They rank 207th overall, and collectively own over 1 million tokens worth over $101 billion.
Meanwhile, Ethereum (ETH), the second most widely held cryptocurrency in treasuries, was added to the balance sheet of 70 companies. According to To ETH strategic reserve data. Collectively, they own 6.14 million ether, worth over $20 billion.
Analysts told Cointelegraph that DATs are likely to start consolidating under a few larger players as the cycle matures and companies try to attract investors, while others predict the trend will see companies expand into other areas of Web3.
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