Increase in Additional Collateral Deposits by Bitcoin-backed Loan Companies

Companies that raise funds using Bitcoin as collateral are facing liquidity risks due to declining collateral ratios. This year, some companies have deposited additional Bitcoin to meet collateral maintenance standards, and in some contracts, they must respond within 12 hours after a collateral shortfall occurs. According to an analysis by CryptoSlate, companies such as Fold, Empery Digital, and Nakamoto have provided additional collateral as Bitcoin prices fell, bringing them close to or below the collateral maintenance standards. Fold deposited an additional 50 BTC and then sold $45 million worth of Bitcoin to fully repay a $20 million loan. Empery Digital provided an additional 576 BTC as collateral and modified the loan agreement to adjust the collateral ratio. Nakamoto deposited an additional 688 BTC and reduced the loan amount. The response time for collateral shortfalls varies by contract, with some requiring a response within 12 hours. So far, there have been no cases of lenders forcibly selling collateralized Bitcoin, but the demand for additional collateral may increase if Bitcoin prices decline. The differing disclosure standards among companies make it difficult for investors to assess risks.