Bitcoin's modest recovery in recent days is failing to draw institutional investors back into the market, while a prolonged downturn could trigger a wave of mergers and acquisitions among companies that hold large Bitcoin treasuries, according to two separate warnings from industry voices.
Institutional Demand Still Absent
Markus Levin, co-founder of XYO, described the current price bounce as a relief rally driven by easing geopolitical tensions rather than a fundamental shift in demand. He noted that such surges typically lack staying power without genuine institutional buying. "Positive news alone has rarely been enough to sustain a prolonged upward trend in Bitcoin," Levin told Decrypt. "Without genuine institutional buying pressure, these rallies tend to fade." On-chain data supports this view, showing no acceleration in large-wallet accumulation during the recovery.
Debt-Fueled Balance Sheets at Risk
At the BTC Prague event, Ben Workman, CIO of asset manager Strive, warned that many Digital Asset Treasury (DAT) companies loaded up on Bitcoin using convertible bonds and other debt instruments during the 2024 bull run. Those strategies are now a liability. "A rising Bitcoin price solves most financial problems," Workman said, "but if weakness persists, companies may be forced to sell their Bitcoin holdings to cover operating expenses or service their debt."
Collateral Clauses Could Amplify Selling
Workman highlighted that many of those convertible bond agreements include collateral maintenance clauses requiring borrowers to maintain a minimum value of collateral—often Bitcoin itself—relative to the loan. A price drop can force additional collateral posting or trigger forced liquidation, creating a cascading effect. This mechanism mirrors the DeFi cascades of earlier crypto winters.
Consolidation on the Horizon
The Strive CIO expects M&A activity among DAT firms to be "highly probable" in the coming months. Larger, better-capitalized players could acquire distressed competitors at discounted valuations, similar to the consolidation that followed the 2022 crash. Bitcoin is currently struggling below $60,000, and macro headwinds—rising rates, regulatory uncertainty—are compounding the pressure.
Both analysts advised investors to look beyond short-term price moves. For DAT firms, a sustained Bitcoin recovery would ease the strain, but the current trajectory suggests a restructuring wave may be unavoidable.
