A recent report from venture firm Breed highlights significant risks for companies holding Bitcoin on their balance sheets. It asserts that most of these companies may not survive the next financial instability.
Reaction to Bitcoin Price Drops
Breed warns of a chain reaction that could occur if Bitcoin's price, currently hovering above $107,000, were to drop suddenly. This would lead to a reduction in market-to-NAV (MNAV) premium and a potential decline in investor interest in shares backed by a falling asset.
Death Spiral for Financial Models
The report emphasizes that a lack of capital could lead to forced sales that further depress Bitcoin's price, creating a 'death spiral' for companies relying on leveraged financing to acquire more Bitcoin.
Future of Companies Holding Bitcoin
Breed stresses that only a handful of companies will likely stay above water, focusing on those that can keep Bitcoin-per-share rising in flat markets, communicate effectively, and avoid unsustainable leverage.
The Bitcoin market for corporate treasuries remains at risk, particularly in the event of a possible price drop in 2025. The critical question will not be how many Bitcoins companies once bought, but how many they can retain in future.
