The adoption of cryptocurrency treasuries has become a trendy strategy among public companies. According to incomplete statistics, at least 124 listed firms have integrated Bitcoin into their financial strategies, drawing significant attention from the crypto market. Some companies have also adopted treasury strategies involving Ethereum, Solana, and XRP.
Despite the growing popularity, industry experts, including Castle Island Ventures partner Nic Carter, have recently expressed concerns. They compare these public investment vehicles to the Grayscale Bitcoin Trust (GBTC), which once traded at a premium but eventually turned into a discount, triggering a chain reaction of institutional failures.
Geoff Kendrick, Head of Digital Assets Research at Standard Chartered, has also issued a warning: if Bitcoin's price falls more than 22% below the average purchase price of these companies, it could force corporate sell-offs. Should Bitcoin drop below $90,000, approximately half of these corporate holdings might face unrealized losses.
The MicroStrategy Effect and Its Imitators
As of June 4, MicroStrategy holds approximately 580,955 BTC, valued at around $61.05 billion. However, the company's market capitalization stands at $107.49 billion, representing a premium of nearly 1.76 times.
Several other prominent companies have recently adopted Bitcoin treasury strategies. Twenty One, backed by SoftBank and Tether, went public via a SPAC with Cantor Fitzgerald, raising $685 million entirely for Bitcoin purchases. Nakamoto Corp, founded by Bitcoin Magazine CEO David Bailey, merged with a listed healthcare company to raise $710 million for Bitcoin acquisition. Trump Media & Technology Group has announced plans to raise $2.44 billion to build a Bitcoin treasury.
Other companies following this trend include SharpLink (planning Ethereum purchases), Upexi (accumulating SOL), and VivoPower (accumulating XRP).
However, several crypto industry insiders note that these companies' operations bear structural similarities to the GBTC arbitrage model of the past. In a bear market, these risks could集中释放, creating a "stampede effect" where initial price declines trigger panic selling and further price collapses.
Lessons from Grayscale's GBTC: Leverage Collapse and Institutional Failures
The Grayscale Bitcoin Trust (GBTC) enjoyed spectacular success during 2020-2021, with premiums reaching as high as 120%. However, in 2021, GBTC quickly turned to a discount, ultimately contributing to the collapse of institutions including Three Arrows Capital (3AC), BlockFi, and Voyager.
GBTC's mechanism was essentially a one-way street: investors could purchase shares in the primary market but had to wait six months before selling them on secondary markets, with no option to redeem them for actual Bitcoin. In the early days, when Bitcoin investment门槛较高 and tax implications were significant, GBTC served as a legitimate gateway for qualified investors (through vehicles like 401(k) plans) to enter the crypto market, sustaining its premium for an extended period.
This premium spawned massive "leveraged arbitrage games": investment institutions borrowed BTC at ultra-low costs, deposited it with Grayscale to acquire GBTC shares, held them for six months, then sold them on the premium-priced secondary market for steady profits.
According to public filings, BlockFi and 3AC together held approximately 11% of GBTC's circulating shares. BlockFi converted client-deposited BTC into GBTC, using it as collateral for loans to pay interest. 3AC went further, utilizing up to $650 million in unsecured loans to increase their GBTC position, then抵押 those GBTC shares to DCG's lending platform Genesis for additional liquidity, creating multiple layers of leverage.
This system worked well in a bull market. But when Canada launched Bitcoin ETFs in March 2021, demand for GBTC plummeted, premiums turned to discounts, and the entire flywheel structure collapsed almost overnight.
BlockFi and 3AC began sustaining losses in this negative premium environment. BlockFi was forced to大规模抛售 GBTC, still accumulating over $285 million in losses in 2020 and 2021, with industry estimates suggesting their GBTC-related losses approached $700 million. 3AC was liquidated, and Genesis eventually issued a statement in June 2022 announcing it had "liquidated the collateral of a large counterparty." Though unnamed, the market widely believed this counterparty was 3AC.
This "meltdown"—born from premium, flourished with leverage, and destroyed by liquidity collapse—became the prologue to the crypto industry's systemic crisis in 2022.
Could Corporate Crypto Treasury Flywheels Trigger the Next Systemic Crisis?
Following MicroStrategy's lead, more companies are forming their own "Bitcoin treasury flywheels" with this core logic: rising stock price → secondary offering fundraising → BTC purchases → boosted market confidence → continued stock price appreciation. This treasury flywheel mechanism might accelerate as institutions gradually accept cryptocurrency ETFs and crypto holdings as loan collateral.
On June 4, news emerged that JPMorgan Chase plans to allow its trading and wealth management clients to use certain crypto-linked assets as loan collateral. According to insiders, the company will begin providing financing against cryptocurrency ETFs in the coming weeks, starting with BlackRock's iShares Bitcoin Trust. In some cases, JPMorgan will also start considering clients' cryptocurrency holdings when assessing their overall net worth and liquid assets for wealth management purposes. This means cryptocurrencies will be treated similarly to stocks, cars, or artwork when calculating available collateral value.
However, skeptics argue that while the treasury flywheel model appears self-sustaining in a bull market, it essentially links traditional financial instruments (like convertible bonds, corporate debt, and ATM offerings) directly to crypto asset prices. If the market turns bearish, this chain could break.
If cryptocurrency prices crash, corporate financial assets would rapidly depreciate, affecting their valuations. Investor confidence would collapse, stock prices would fall, and companies' ability to raise funds would be constrained. If facing debt or margin call pressures, companies might be forced to liquidate BTC holdings. A concentrated release of massive BTC selling pressure would form a "sell wall," further depressing prices.
More seriously, if these companies' stocks are accepted as collateral by lending institutions or centralized exchanges, their volatility could transmit further into traditional financial or DeFi systems, amplifying risk chains. This is precisely the script Grayscale's GBTC experienced.
Weeks ago, famous short-seller Jim Chanos announced he was shorting MicroStrategy while going long Bitcoin, based on his negative view of its leverage. Despite MicroStrategy's stock surging 3,500% over the past five years, Chanos believes its valuation has severely detached from fundamentals.
Some crypto treasury advisors point out that the current trend of "equity tokenization" might exacerbate risks, especially if these tokenized stocks are also accepted as collateral by centralized or DeFi protocols, potentially triggering uncontrollable chain reactions. However, some market analysts believe we're still in the early stages, as most trading institutions haven't yet accepted Bitcoin ETFs as margin collateral—even those from issuers like BlackRock or Fidelity.
Assessing the Downside Risks
On June 4, Standard Chartered's Geoff Kendrick warned that 61 public companies collectively hold 673,800 BTC, representing 3.2% of the total supply. If Bitcoin's price falls more than 22% below these companies' average purchase price, it could trigger forced corporate sell-offs. Referencing the 2022 case where Core Scientific sold 7,202 BTC when the price was 22% below their cost basis, Kendrick suggested that if Bitcoin falls below $90,000, roughly half of corporate holdings could be at risk of being underwater.
How significant is MicroStrategy's specific risk? A recent discussion on the Web3 101 podcast, "MicroStrategy: The Bitcoin Whale and Its Capital Game," sparked market attention. The conversation noted that while MicroStrategy has been called "leveraged Bitcoin" in recent years, its capital structure isn't a traditional high-risk leverage model but rather a highly controlled "ETF-like + leverage flywheel" system.
The company raises funds to purchase Bitcoin through convertible bonds, perpetual preferred shares, and At-The-Market (ATM) offerings, creating a volatility logic that持续吸引市场关注. Crucially, the maturity dates for these debt instruments are mostly concentrated in 2028 and beyond, giving them almost no short-term debt repayment pressure during cyclical pullbacks.
The core of this model isn't单纯囤币 but dynamically adjusting financing methods, employing a strategy of "adding leverage at low premiums and selling stock at high premiums" to form a self-reinforcing flywheel mechanism in the capital markets. Michael Saylor has positioned MicroStrategy as a financial proxy for Bitcoin's volatility, allowing institutional investors who cannot directly hold crypto assets to "无障碍" hold a high-Beta Bitcoin proxy (which fluctuates more dramatically than the benchmark BTC asset) in the form of a traditional stock. Therefore, MicroStrategy has not only built powerful financing and anti-fragility capabilities but has also become a "long-term stable variable" in Bitcoin's market volatility structure.
For those looking to understand how different treasury strategies compare across various market conditions, explore more strategies that institutions are employing today.
Frequently Asked Questions
What is a crypto treasury strategy?
A crypto treasury strategy involves companies holding cryptocurrencies like Bitcoin on their balance sheets as part of their corporate financial assets. This approach aims to hedge against inflation, generate returns, and attract investor interest in the growing digital asset space.
How does MicroStrategy's approach differ from GBTC?
While GBTC was a trust product with structural limitations (no redemption mechanism, lock-up periods), MicroStrategy is an operating company using various financing methods to acquire Bitcoin directly. MicroStrategy holds actual Bitcoin, whereas GBTC investors held shares representing claims on Bitcoin held by the trust.
What are the main risks of corporate crypto treasuries?
The primary risks include cryptocurrency price volatility impairing corporate assets, inability to raise funds during market downturns, forced liquidations creating selling pressure, and potential contagion to traditional financial systems if company stocks used as collateral decline significantly.
Why are companies adopting Bitcoin treasury strategies now?
Companies are attracted to Bitcoin's potential as a store of value and inflation hedge, the positive market attention it generates, and the potential financing advantages through stock appreciation connected to Bitcoin performance. The maturation of crypto infrastructure has also made holding digital assets more feasible for corporations.
Can corporate crypto treasury strategies affect Bitcoin's price?
Yes, concentrated buying by companies can create upward price pressure, while forced large-scale selling during market stress could significantly accelerate downward price movements, especially if multiple companies attempt to exit positions simultaneously.
How can investors monitor these risks?
Investors should track the average purchase prices of corporate BTC holdings, debt maturity schedules, financing structures, and overall market sentiment. Understanding the potential for reflexive relationships between stock prices and Bitcoin prices is also crucial for risk assessment.
Currently, public companies' crypto treasury strategies remain a focal point in crypto markets, sparking debates about their structural risks. While MicroStrategy has built a relatively robust financial model through flexible financing methods and cyclical adjustments, whether the broader industry can maintain stability through market fluctuations remains to be seen. Whether this round of "crypto treasury fever" will replicate GBTC's risk trajectory remains an open question filled with unknowns. For those interested in tracking how these developments unfold in real-time, view real-time tools that provide ongoing market intelligence.