Swiss crypto bank Sygnum has cautioned that escalating Bitcoin accumulation by major entities like investment firm Strategy risks undermining Bitcoin’s viability as a central bank reserve asset. The bank cited liquidity constraints and stability threats stemming from concentrated ownership as primary barriers to institutional adoption.
Sygnum highlighted that Strategy now holds nearly 3% of Bitcoin’s total supply through aggressive acquisitions, creating market liquidity concerns and challenging long-term institutional participation. Such concentration could destabilize Bitcoin’s price dynamics and deter risk-averse entities like central banks from considering it a reserve currency.
The firm specifically warned that Strategy’s leveraged acquisition model—using convertible debt and stock premiums—introduces systemic vulnerabilities. This high-beta approach heightens risks of forced liquidations during market stress, potentially triggering cascading selloffs.
Additionally, Sygnum noted that concentrated holdings raise market manipulation concerns and amplify volatility, damaging Bitcoin’s perception as a reliable safe-haven asset. Experts recommend diversified, risk-adjusted allocation strategies for institutions to enhance market resilience and mitigate liquidity pitfalls.