What Will the Slowing Growth of Bitcoin, Ethereum Treasury Buys Mean for Markets?

The rise in Bitcoin, Ethereum, and other corporate crypto treasuries helped fuel the summer's massive market gains. Now their slowing growth has played a large role in sapping prices already sensitive to inflation and other macroeconomic uncertainties.

The treasuries' waning activity could continue to weigh on markets with volatility likely to remain heightened in the near-term, three market observers told Decrypt.

"When treasuries stop buying, it removes an important demand floor and undermines confidence in the balance-sheet-as-strategy narrative," Joe DiPasquale, CEO of crypto fund manager BitBull Capital, wrote in a text to Decrypt. "At the same time, forced liquidations in derivatives and broader risk-off sentiment have accelerated the decline, creating a feedback loop that pressures both crypto assets and the equities tied to them."

Bitcoin was recently trading at about $109,400, off more than 5% over the past week, according to crypto markets data provider CoinGecko. At one point Friday, the largest cryptocurrency by market value dropped below $109,000 for the first time since September 1. Ethereum and other major altcoins have also fallen deeply into negative territory.

Those latest declines have come as Bitcoin treasury buys have plummeted to just 12,600 BTC in August, and 15,500 so far this month—a combined total that is less than half the amount that firms acquired in July, according to data analytics provider CryptoQuant.

"We’ve seen treasury accumulations cool off compared to the summer, when companies were buying at a record pace," Michael McCluskey, CEO of Sologenic—which offers a decentralized exchange and related services—told Decrypt. "That slowdown has coincided with softer prices in Bitcoin and other major cryptocurrencies, which makes sense given how much corporate demand was propping up the market."

McCluskey added: "In the short term, the absence of steady buying leaves the market more exposed to volatility.”

A number of treasury firms' share prices have plunged along the way, with Solana treasury Helius Medical Technologies falling 38% over the past week and Ethereum-focused BitMine Immersion sinking more than 13% over the same period.

Bitcoin-minded Strategy—the originator of the pivot-to-crypto accumulation move—and Metaplanet each fell about 9%, the latter coming despite the Japan-based firm's latest purchase of more than 5,400 BTC on Monday and a favorable analyst rating a day later. Helius and several other companies that raised money through private placement in public equity (PIPE) deals are changing hands well off their issue prices.

Going forward, some treasuries may encounter additional challenges, with The Wall Street Journal reporting on Thursday that financial regulators are now exploring unusually high trading volumes and dramatic share price increases among among them.

Still, in a text to Decrypt, Gerry O'Shea—head of global market insights at crypto asset manager Hashdex—wrote that Bitcoin could hit $140,000 or higher by year's end, with corporate treasuries helping to spark a rally.

"Corporate treasury adoption will remain a big part of this demand, even as many of these publicly traded companies face near-term headwinds from volatility and scrutiny from investors regarding their specific strategies," he wrote.