Conversations about Bitcoin’s price decline should include the impact of cryptocurrency treasuries that contributed to the decline, argues Omid Malekan, a blockchain author and adjunct professor at Columbia Business School.

“Any analysis of why cryptocurrency prices continue to fall must take DAT into account [digital asset treasuries]”, Malekan he said on Tuesday in post

He added that there are a few companies that have tried to “create lasting value. But I can count them on one hand.”

Analysts are blaming trade tensions between the United States and China, as well as 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, down from an all-time high of over $126,000 on October 6. According to this CoinGecko

Companies in it for the wrong reasons causing the problem

Many cryptocurrency acquisition companies have been able to raise millions from investors looking for cryptocurrency exposure, and Malekan said some people launching cryptocurrency companies saw the model “as a way to get rich quick.”

“Starting any public entity is expensive,” he added. “The money needed for Shell/PIPE/SPAC is in the millions. As are the fees paid to all the bankers and lawyers involved.”

“The money spent on these fees had to come from somewhere,” he said.

Cryptocurrency treasury companies are raising a significant supply of tokens in major cryptocurrencies using leverage through equity sales, convertible bond and debt offerings, which has raised concerns that leveraged companies could exacerbate a market downturn through forced asset sales.

Others have sought to entice investors by generating a yield on their holdings through means such as staking, while some have signaled plans to deploy some of their holdings in crypto protocols to lend and provide liquidity.

“The greatest harm that DATs did to the aggregate market capitalization of cryptocurrencies was to provide a massive exit event for supposedly locked tokens,” Malekan stated. “I’m still amazed that so many other investors haven’t reacted because of this.”

He added that “raising too much money and minting too many tokens, even if locked or for the sake of ecosystem development, is cryptocurrency gangrene.”

Related: Are struggling companies using cryptocurrency reserves as a PR savior?

Crypto Treasury Trend Will Explode in 2025

The number of cryptocurrency vaults has exploded this year, with an October report from asset management firm Bitwise tracking 48 up-to-date cases of companies adding Bitcoin to their balance sheets. together There are 207 in total and they collectively hold over a million tokens worth over $101 billion.

At the same time, Ether (ETH), the second most frequently adopted cryptocurrency for state treasuries, was added to the balance sheets of 70 companies, According to to the ETH strategic reserve data. Collectively, they hold 6.14 million ether worth over $20 billion.

Analysts told Cointelegraph that DATs will likely begin to consolidate among a few larger players as the cycle matures and tries to attract investors, while others speculate that this trend will see companies expand into other areas of Web3.

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