Bitcoin's Dark Side: Nakamoto Inc.'s 99% Crash and the Contagion Risk

The Bitcoin market has been plagued by extreme fear, with the Crypto Fear and Greed Index plummeting to one of its lowest levels since 2019. At press time, Bitcoin was trading near $66,131, down almost 3% in just 24 hours.

Nakamoto Inc., a company that heavily invested in Bitcoin, has been hit particularly hard, with over 99% of its market value disappearing in the last 280 days. The company's decision to buy Bitcoin at an average price of $118,000 near the top of the market has left it with significant unrealized losses.

According to Coin Bureau's executive Nic Puckrin, this could create contagion risk, where trouble at one company spreads to others that also rely heavily on Bitcoin. Digital asset treasuries (DATs) are beginning to show signs of stress from the sharp sell-off in Bitcoin, affecting their share prices.

The slowdown in everyday activity on the Bitcoin network is also a concern, with the number of active addresses falling and Open Interest in Futures and Options markets declining. This suggests that traders are closing their positions instead of opening new ones, further contributing to the bearish sentiment.