Digital asset bank, Sygnum, has cautioned against the growing trend of institutional demand for Bitcoin, spurred on by aggressive acquisition strategies from companies like Strategy (previously known as MicroStrategy). In a recent report, Sygnum argues that such tactics risk undermining Bitcoin’s credibility as a reserve for central banks.
Strategy recently procured an additional 1,045 BTC, costing around $110.2 million, which increased its total Bitcoin holdings to a staggering 582,000 BTC. Valued over $63 billion, this accounts for approximately 2.8% of Bitcoin’s total supply and has led to around $22 billion in paper gains.
Currently, 144 firms have incorporated some form of Bitcoin treasury, including recent adopters like Metaplanet, Semler Scientific, KULR, and Twenty One. Experts from Bernstein project that Strategy and similar companies could add a monumental $330 billion to their Bitcoin treasuries over the next half-decade, influenced by the pro-Bitcoin stance of the Trump administration.
As Strategy plans to expand its Bitcoin holdings through various financial programs, Sygnum warns that such concentration could deter central banks from Bitcoin adoption due to concerns about liquidity, volatility, and central influence.
The bank’s analysts highlighted, “Large concentrated holdings are a risk for any asset. However, Strategy’s holdings are reaching a point where they could prove problematic. Their goal of acquiring 5% of the total issued Bitcoin raises concerns. Too much accumulation undermines Bitcoin’s safe haven properties and could make Bitcoin inappropriate for central banks to hold as a reserve asset.”
Beyond niche cases like El Salvador, few central banks are currently considering adding Bitcoin to their reserves. However, in March, President Trump signed an executive order to establish a U.S. Strategic Bitcoin Reserve. Authorities in the Czech Republic, Bhutan, and Pakistan also appear keen.
Despite Sygnum’s warnings, Michael Saylor, co-founder of Strategy, remains confident in his company’s resilience. Saylor argues that Strategy’s capital structure can withstand a Bitcoin drop of up to 90% that persists for four to five years. However, he acknowledged that shareholders would “suffer” in such a scenario.
Experts at Bernstein also argue that with Strategy’s relatively low debt levels and no payments due until 2028, the firm’s leverage remains manageable. However, the risk to Bitcoin’s price stability and the durability of this model could increase in the event of a sharp downturn.
