Bitcoin Price Crash Affects Big Money Holders
Back in November 2021, the price of Bitcoin surged to an all-time high (ATH) of about $69,000. However, BTC (the biggest cryptocurrency by market capitalization) plunged later in January 2021 to around $33,000, the lowest level on record since July 2021.
Other crypto assets, from Ethereum to altcoins, have also surrendered their gains. While there seems to be a slight recovery in the BTC price, with the crypto currently trading in the $36,000 range, its value is down nearly 50% from its recorded ATH.
According to Quartz on Thursday (January 27, 2022), the 26 publicly traded companies with the largest Bitcoin holdings saw the value of their portfolios drop by nearly half. The collective value of Bitcoin held by these 26 enterprises stood at over $14 billion. These companies include MicroStrategy, Tesla, Square, Nexon, along with Bitcoin mining companies and crypto exchanges. However, the current BTC price slump wiped off $7 billion from their balance sheets.
There has been speculation that the price could further decline, with some analysts already stating that the current market signals the coming of a “crypto winter”, a term that refers to a continuous drop in the price of cryptocurrency assets over a prolonged period. The crypto market experienced a similar bear phase between late 2017 and 2018.
However, some others have expressed optimistic views, stating that the market is just correcting itself after a parabolic runup. SkyBridge Capital founder, Anthony Scaramucci, recently advised investors to stay long on Bitcoin and other assets, instead of panicking.
According to Scaramucci:
“Take a chill pill, stay long Bitcoin, other cryptocurrencies like Algorand and Ethereum, and I think you’re going to be very well-served long-term in those investments.”
Corporate Investors not Deterred by Market Pullback
Despite the current cryptocurrency market situation, many corporate crypto holders will refrain from selling their BTC, starting with the business intelligence firm MicroStrategy. The company’s Chief Financial Officer (CFO), Phong Le, recently said that MicroStrategy was going to continue accumulating Bitcoin, despite the price crash, and has no plans to sell. According to the CFO:
“Our strategy with Bitcoin has been to buy and hold, so to the extent we have excess cash flows or we find other ways to raise money, we continue to put it into Bitcoin.”
MicroStrategy started purchasing Bitcoin in August 2020. Since then, the business intelligence firm has continued to accumulate BTC, with its Bitcoin holdings currently north of 120,000 coins.
Electric vehicle manufacturer, Tesla, in its Q4 2021 report, revealed that the company neither added to nor sold its Bitcoin holdings. Back in February 2021, Tesla revealed that it purchased Bitcoin worth $1.5 billion, and later sold 10% of its holdings in Q1. The Q4 report noted that the firm’s BTC was worth $1.26 billion.
Bitcoin Pullback Cuts Across Industries
While many of the publicly traded companies who hold Bitcoin are exchanges, digital asset investment firms, or Bitcoin mining operators, there are some BTC investors whose services have no cryptocurrency connection. One such company is South Korea’s largest gaming company, Nexon, who pumped $100 million into Bitcoin back in April 2021. Likewise, popular Chinese photo-editing app maker Meitu, started buying BTC in March 2021. As at January 27, 2022, the company said it lost about $15 million on its investment.
