Growing number of public listed companies are announcing their plans to include Bitcoin.BTC() into their corporate treasures, and this trend has begun to cause some concern.
In the 30-day span to June 11, at least 22 entities added Bitcoin as a reserve asset, according to BitcoinTreasuries.net.
Strategy (formerly MicroStrategy) popularized the buying spree, with its aggressive Bitcoin accumulation strategy. inspired a wave of imitators.
Critics point out that while some companies have been lauded for their visionary strategy, others enter the market despite having weak finances, by using Bitcoin as a lifeline Rather than a long-term conviction.
“What worries me is the copycats,” Fakhul M. Miah is the managing director at GoMining Institutional.
“There are now other companies trying to create Bitcoin banks without proper safeguards or risk management. If these smaller firms crash, we could see a ripple effect that hurts Bitcoin’s image.”
Standard Chartered Bank, in a research report published on June 3, warned that corporate treasuries could be at risk of going under if BTC drops below $90,000, and a drop by 22% below the average price would force liquidations.
Bitcoin pressure may reverse itself
Michael Saylor, CEO of Strategy Inc. began collecting Bitcoins in August 2020. He has also used various methods to acquire Bitcoin. fundraising methods to finance purchasesStock offerings, convertible loans, and secured loan are all examples of this. According to June 11, the company had 582,000 BTC stored in its wallet.
“At the time, [spot Bitcoin ETFs] didn’t exist. If you were a corporation without the infrastructure to self-custody Bitcoin, MicroStrategy gave you a shortcut. You could just buy their stock and get indirect Bitcoin exposure,” Miah said.
Bitcoin Exchange-Traded Funds (ETFs). approved in the US in January 2024The debut of a new artist with more than $4.5 billion in trading volume. BlackRock is the largest asset manager in the world. BlackRock’s iShares Bitcoin Trust became the first ETF to ever surpass $10,000. $70 billion in assets under management.
A new wave of institutional adoption started in the second quarter 2025. Instead of gaining an indirect exposure to Bitcoin through ETFs and Strategy, certain companies now position themselves as the substitute by adding Bitcoin directly into their corporate treasuries.
The corporate Bitcoin treasuries fuel demand, but also introduce systemic risk. Geoff Kendrick of Standard Chartered Bank’s digital assets department said, in a note sent to investors on June 3, that a sudden price decline could cause cascading transactions, but also introduce systemic risks.
Related: Meta’s Bitcoin rejection means Big Tech is still skeptical
The market cap of most of these Bitcoin treasuries is greater than 1, meaning that their Bitcoin value exceeds their net asset value. According to an analyst at the British Bank, this difference is caused by regulatory restrictions that exist in some countries. prevent direct crypto investments or ETFsFor institutional investors, Bitcoin holding companies are a convenient workaround.
Kendrick cautioned that the current dynamic might not be sustainable. Demand for proxy exposure is likely to diminish as the regulatory environment evolves, and Bitcoin ETFs are more readily available. If that occurs, then companies with inflated NAVs will see their values pushed down. This is especially true if they have a core business which doesn’t warrant such high premiums.
Bitcoin Treasury Companies Are Not Strategy
A mix of debt and equity has allowed Strategy to accumulate 71% Bitcoin. Recently, many new entrants used aggressive leverage to get in at higher levels of price.
Due to the concentration of BTC holdings and debt-financed positions, any sudden drop in BTC may trigger liquidations.
Strategy has more experience than other Bitcoin treasury players. Strategy has been around for a lot longer than these other players. 2022 crypto crash, when Bitcoin plunged more than 50% — to $15,500 from around $31,000 — without being forced to sell.
Strategy had significant unrealized loss at the time. Its Bitcoin average purchase price was around $31,000.
More alternatives have emerged, but it is still unclear whether the next generation of Bitcoin Treasury Companies can withstand another correction.
Miah noted that the mining of Bitcoin has become more popular, and is not limited to ETFs.
“Mining produces virgin Bitcoin — coins with no transaction history. That’s extremely valuable to institutions and sovereign entities because it’s clean, traceable and regulator-friendly. No worries about tainted coins linked to illicit activity,” “He said”
Related: Violent crypto robberies on the rise: Six attacks that targeted investors
Mining can be a good alternative for some institutions to add Bitcoins to their accounts. However, Bitcoin mining is notoriously competitive, and its rewards — paid in Bitcoin — are cut in half every four years through a process called halving.
In 2028 the reward for each block will be reduced to 1.625 BTC per 10 minutes.
Bitcoin meets the institutional reality
Bitcoin’s increasing corporate adoption and ETFs are also challenging its decentralization. Bitcoin’s core design was to be a decentralized currency that offered unrestricted financial services regardless of background and situation.
Bitcoin usage is increasing as institutions and governments manage more of it.
Public companies hold 819,689 BTC now, which is 3.9% the 21 million Bitcoin supply limit. Another 292,047 BTC is controlled by private firms, increasing the corporate share to approximately 5.29%.
“I don’t think it compromises Bitcoin’s original mission,” Samson Mow told Cointelegraph Magazine that he is the Jan3 founder, a Bitcoin enthusiast, and a vocal Bitcoin maxi. recent interview.
“Inevitably, Bitcoin was going to end up in the hands of companies, institutions and governments because it is valuable, right? This is how it works, and what we can do is try our best to educate them on what Bitcoin is and why it’s different from everything else or anything else that’s come before it.”
Indirect avenues like these offer an easier and safer way to invest, especially at a period when owning crypto can be a physical risk.
“Not everyone wants to self-custody or manage keys. People lose house keys all the time — imagine losing your crypto keys. Some people value peace of mind,” Miah said.
By the end May, a GitHub repository Jameson Lopp’s, Chief Security Officer of Bitcoin Custody Firm Casa, stated that in 2025, there will be 29 violent attacks against cryptocurrency holders and their assets. In mid-May, 22 such incidents were recorded.
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Source: cointelegraph.com
