Blockchain writer and adjunct professor at Columbia Business School, Omid Malekan, believes that discussions about the decline in Bitcoin prices should include the impact of cryptocurrency treasury companies, which have played a role in driving the price down.
Malekan stated in a post on X platform on Tuesday: "Any analysis of why cryptocurrency prices continue to fall must take Digital Asset Treasuries (DATs) into account. Overall, they have ultimately become a large-scale cash-out and exit event—one of the reasons for the price decline."
He added that there are indeed a few companies trying to "create sustainable value, but they are few and far between."
Analysts attribute the decline in the cryptocurrency market to U.S.-China trade tensions and other macroeconomic factors. According to CoinGecko data, Bitcoin has fluctuated between $99,607.01 and $113,560 over the past seven days, retreating from the historical high of over $126,000 set on October 6.
Malekan noted that many companies buying cryptocurrencies have been able to raise millions from investors seeking exposure to crypto assets, with some founders of these companies viewing it as a "get-rich-quick scheme."
He added, "Establishing any type of public entity is very expensive. The funds required for shell resources/PIPE/SPAC can reach millions of dollars. The fees paid to all bankers and lawyers are similarly high."
"Money spent on these fees has to come from somewhere," he said.
Cryptocurrency treasury companies have been acquiring large supplies of mainstream cryptocurrencies and leveraging operations through share sales, convertible notes, and debt issuance. This has raised concerns that leveraged companies may exacerbate market declines by being forced to sell assets.
Some companies are generating returns on their held assets through staking to attract investors; others plan to allocate part of their holdings into lending and liquidity provision in crypto protocols.
Malekan stated, "The biggest damage DATs have caused to the overall crypto market cap is providing a large-scale exit opportunity for tokens that should have been locked. I am still surprised that so many other investors have not raised objections to this."
"Even if locked or used for ecosystem growth, excessive financing and excessive token minting are a blight on the crypto industry," he added.
According to a report released by asset management firm Bitwise in October, 48 new companies have added Bitcoin to their balance sheets this year, bringing the total to 207 companies, which collectively hold over 1 million tokens, valued at over $101 billion.
Meanwhile, according to data from Strategic ETH Reserve, Ethereum, as the second most adopted mainstream cryptocurrency by treasuries, has been added to the balance sheets of 71 companies.
Analysts told Cointelegraph that as the cycle matures and companies compete for investors, DATs are likely to begin concentrating among a few large players, and some speculate that this trend will encourage companies to expand into other areas of Web3.
Related: Reports indicate that cryptocurrency exchange Gemini plans to integrate prediction markets.
Original: “Professor Believes Crypto Treasury Companies Accelerate Market Decline”
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