Standard Chartered warned that many of these firms have entered the market at high valuations, often with net asset value (NAV) entry multiples above 1, signaling overexposure to price swings.
He warned that “Bitcoin is volatile” and such high average entry points make some companies particularly vulnerable.
According to Kendrick:
“We identify a pain level of 22% below the average purchase price as a potential liquidation level.”
He explained that a 22% drop below the average purchase price may be the threshold at which liquidation risk becomes real for companies holding Bitcoin in treasuries.
Drawing from historical market events, the report cited Core Scientific’s 2022 experience as an indicator of potential stress levels.
The report included a chart showing a wide spread in purchase prices across public companies, with many clustered in the $90,000 to $110,000 range. If markets reverse sharply, firms with thinner balance sheets or investor pressure could be forced to sell.
Kendrick wrote:
“While I see these multiples as justified for now (due to market inefficiencies created by regulatory and investment committee conservatism), over time that justification will fade.”
As Bitcoin trades above the $100,000 mark, the momentum trade remains intact. However, Standard Chartered’s warning adds a note of caution: without prudent risk management, companies embracing BTC could face the same volatility that once pushed miners and speculators to the brink.
