Fold, a Bitcoin treasury company, sold approximately $45 million worth of Bitcoin [BTC] at an average price of approximately $71,000 per BTC as part of a strategic balance sheet restructuring.
Instead of just keeping its Bitcoin treasury, the company decided to convert some of its cryptocurrency holdings into cash.
It used $20 million of the proceeds to fully pay off its secured debt, backed by Bitcoin. The remaining $25 million was held in cash without restrictions.
Has Fold Lost All Its Bitcoin Supply?
Additionally, Fold emphasized that it still has a significant Bitcoin treasury, meaning it can benefit from future long-term BTC growth and sell additional assets if favorable investment opportunities arise.
However, compared to major Bitcoin DATs, Fold only holds 192 BTC worth $12.1 million, according to BitcoinTreasuries.NET.
Will Reeves, chairman and CEO of Fold, says the same: said,
We have reduced funding risk, strengthened our balance sheet and ensured that short-term market volatility does not hinder the execution of our roadmap.
What’s behind this sudden sell-off?
Fold’s $20 million debt, in turn, was a calculated financing choice and not the direct result of financial difficulties.
As a financial services company specializing in Bitcoin, Fold had amassed a significant Bitcoin treasury and, like many other companies in the cryptocurrency space, decided to lend against these assets rather than liquidate them.
This allowed the company to remain exposed to Bitcoin’s potential growth, while at the same time being able to obtain funding for operations, product development and expansion plans.
However, Bitcoin-backed loans come with interest charges and can become riskier when the market is volatile.
Now that it has sold some of its Bitcoin shares and paid off debt, Fold is free from the responsibilities, interest payments, and financing risks that come with fluctuations in Bitcoin’s price.
It also has more flexibility to invest in growing products such as the Bitcoin Credit Card and business services.
Good timing or a miscalculated step?
This happened when Bitcoin was trading at $62,742.09, up 1.92% from the previous day, but down more than 22% from the previous month.
Given the timing, it appears that Fold’s choice was influenced less by the current price of Bitcoin and more by risk management and growth planning.
The monetization likely occurred before Bitcoin’s decline towards $61,000, as the company revealed that it was selling its Bitcoin at an average price of around $71,000 per BTC.
Fold was able to raise more money for expansion and pay down its $20 million Bitcoin-backed debt by locking in profits at higher levels.
This is not an isolated incident, as on May 9, DeepBook’s USDC margin pool became undercollateralized, putting increasing pressure on its leveraged trading infrastructure. The imbalance resulted in bad debts of nearly $239,700.
Final summary
- Despite selling around $45 million worth of Bitcoin, Fold emphasized that it still has a significant Bitcoin treasury.
- While Fold’s $20 million debt may seem like a direct result of financial troubles, it is actually a calculated financing choice.