Strategy might be on track to overtake BlackRock as the world’s largest corporate Bitcoin holder. But Michael Saylor’s firm still faces three “narrative barriers” that could slow it down.

One is concentration risk, said James Seyffart, a fund expert at Bloomberg Intelligence.

If an institutional investor who knows nothing about the Bitcoin space sees that a majority of the token’s supply is owned by a single company, “I’m going to be a little bit skeptical,” Seyffart said on the Bitcoin History podcast on March 24.

The other two include qualms about quantum computing and concerns about portfolio diversification.

“These are all things that are just going to be barriers,” he said.

Investors unwilling to buy up Strategy stock could have serious negative repercussions for Bitcoin, too.

If investment into Strategy co-founder Michael Saylor dries up, his firm’s ability to buy up more Bitcoin would also slow — effectively stopping one of the biggest Bitcoin buyers on the planet from more purchases.

Concentration risk

Right now, Strategy owns more than 720,000 Bitcoin worth around $53 billion.

That’s around 3.5% of Bitcoin’s total supply in the hands of Michael Saylor.

For Seyffart, the power that Saylor commands over his own company is a risk that’s simply too hard to ignore.

“Saylor doesn’t own full voting control, but he owns a lot of it and de facto control right now,” Seyffart said. “He has a lot of control over a significant portion of Bitcoin’s outstanding balance and future outstanding balance.”

Institutions don’t like that, noted Seyffart.

Quantum computing

Then there’s quantum computing.

“Obviously, I do hear people from the traditional fianncial world asking me what’s going on with quantum computing,” said Seyffart. “That’s another risk that people are asking about.”

Over the last year or so, the Bitcoin community has been embroiled in a heated debate over how to address the alleged threat of quantum computers, a still-theoretical yet rapidly progressing technology that could break the encryption that secures the Bitcoin network.

Researchers at Chaincode Labs have published estimates that up to 50% of all Bitcoin could be vulnerable to a quantum attack.

Diversification risk

The third barrier is diversification.

Endowments and sovereign wealth funds building crypto allocations may baulk at a market where a single entity controls an ever-growing share of supply, regardless of whether that control is direct or distributed across shareholders, Seyffart noted.

Even so, Seyffart doesn’t think any one of these concerns, on its own, is enough to bring down Strategy.

“I don’t have any blatant ‘this domino is going to fall and cause all these dominoes to fall,’ he said.

“It’s more just like, obviously this is something that people are going to point to.”