A recent report from venture capital firm Breed raises questions about the future of Bitcoin treasury companies, some of which may face significant challenges.
Funding Challenges
According to the report, the health of Bitcoin treasury companies depends on their ability to command a multiple of their net asset value (MNAV). A drop in Bitcoin's price can lead to a decline in MNAV and a decrease in their shares.
Trends in the Bitcoin Market
There is a likelihood that decreasing access to credit and looming debt maturities may trigger margin calls, forcing companies to sell Bitcoin and subsequently lowering its price.
Current Situation and Outlook
While most companies currently finance their purchases with equity, which may limit negative market fallout, the situation could change if debt financing becomes more prevalent.
The Breed report highlights serious risks for Bitcoin treasury companies; however, many may mitigate broader market impacts due to their financial strategies.
