Public companies that have been actively buying and holding Bitcoin and Ether have largely ceased their accumulation efforts following a market downturn that began earlier in October. This significant pause signals a recent dip in confidence among these major players in the digital asset space.
According to David Duong, global head of investment research at Coinbase Institutional, digital asset treasury (DAT) companies that invest in Bitcoin (BTC) "have largely ghosted the post-Oct 10 drawdown and are yet to re-engage." Duong shared this observation on Sunday via social media.
He further elaborated that over the past two weeks, the purchasing activity by DATs for Bitcoin has fallen to near year-to-date lows. This trend has persisted, with no meaningful recovery even occurring on days when the market saw positive movement.
This slowdown in cryptocurrency acquisition by these entities indicates a cautious sentiment within the sector. Many crypto treasury companies have seen their market valuations decline, approaching the actual value of their asset holdings. Concurrently, their stock prices have cooled off after experiencing substantial rallies.
Bitcoin experienced a notable decline of 9% between October 10 and October 11, dropping from approximately $121,500 to lows below $110,500. This month, Bitcoin has seen further dips to lows below $105,000. However, it has since shown signs of recovery, trading around $114,250 and showing little change over the preceding 24 hours.
BitMine Continues to Acquire Assets
Duong highlighted the significance of this buying lull from Bitcoin-acquiring companies, noting that they are typically "heavy hitters with deep pockets." Their decision to pull back since October 10th is interpreted as a clear indication of "limited confidence on their part."
The reduction in purchasing activity "highlights some caution from large players post leverage washout, even at current ‘support’ levels," Duong added.
In contrast to the broader trend, Duong identified Ether (ETH) treasury company BitMine Immersion Technologies as the "only consistent buyer" since the market decline. Data indicates that BitMine has invested over $1.9 billion since October 10th, acquiring close to 483,000 ETH.
Ether experienced a decline along with Bitcoin earlier this month, falling by more than 15% to a low of $3,686 between October 10th and 11th. Since then, it has seen a modest recovery, trading at $4,130.
BitMine's continued purchases, along with "smaller contributions from other funds," have helped to maintain a positive trend in the total seven-day purchases by ETH treasury companies, according to Duong.
However, Duong expressed concern that if BitMine were to "slows or pauses, we worry that the apparent corporate bid could fade."
He concluded that this situation warrants a more cautious short-term market positioning. The market's fragility is amplified when "the biggest discretionary balance sheets are sidelined."