Bitcoin treasury firm GD Culture Group has approved the possible sale of up to 7,500 BTC to fund a $100 million share buyback. According to a February 25th filing, this is due to increasing unrealized losses, which are also affecting some public companies holding large amounts of Bitcoin.
This indicates that GD Culture Group is changing its capital allocation methods as the cryptocurrency market experiences prolonged periods of volatility. The firm’s BTC holdings are currently valued at approximately $513.5 million, even though it purchased them for $841.5 million.
Thus, the unrealized loss on the coins held by GD Culture Group is roughly $328 million. Management has been authorized to sell all of the company’s BTC reserves at any time without a set timeline or volume requirements.
GDC stock was trading at $4.20, an increase of 26.13% from a previous closing price of $3.33, according to TradingView data as of this writing. However, the company’s stock price remains down by 3% year-to-date.
Source: TradingView
This reflects the growing difference between short-term price movement in equity and long-term price decline in BTC treasury amounts. The proposed buyback is intended to support the shareholder value of the GD Culture Group stock.
Also, it is to enhance the capital efficiency of the company as the value of its BTC holdings continues to decline.
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GD Culture Group, along with other public companies such as Galaxy Digital and American Bitcoin, holds large reserves of BTC. This move is similar to Bitdeer, which sold off all of its reserves after a series of monthly sales of its Bitcoin holdings.
It is also similar to Riot Platforms, which reduced its Bitcoin holdings over the past few months. These developments indicate that corporate BTC treasuries are becoming increasingly influenced by the overall performance of the broader cryptocurrency market.
Meanwhile, market analyst Alex Thorn has pointed out that the Bitcoin price is trading close to both its 200-week moving average and its realized price. Throughout history, these two price levels have indicated late-stage capitulation.
Additionally, Thorn stated that the RSI of Bitcoin is near levels that were marked as bottoms during prior cycles. Thorn further stated that the worst part of the current decline in Bitcoin may be coming to an end.
But recovery will likely take a considerable amount of time. According to him, there would be a protracted period of sideways price action occurring if there is a continued lack of positive macro catalysts.
Liquidation of Bitcoin by corporations is becoming more prevalent, indicating stress in the balance sheets of public treasury firms that own large quantities of the digital asset.
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