Corporate BTC treasuries are a threat to market stability

Comparing this year’s Bitcoin (BTC) chart to the U.S. dollar’s DXY index makes for a stark contrast. While Bitcoin has soared to new heights, breaching the $120,000 threshold, the DXY has had a rough year — down nearly 10% this year to date — and is predicted to keep falling in the foreseeable future. In this environment, it’s perhaps unsurprising that more and more companies are turning to Bitcoin as an alternative asset to prop up their treasuries. But this seemingly innocuous trend could quickly turn into a threat not only to Bitcoin itself, but to the wider financial market.

Only a year ago, $100,000 for Bitcoin was still a distant dream, while crypto was battling U.S. regulators and struggling to recover its image after the disastrous collapse of 2022. But what a difference a year makes. Fast forward to today, and the SEC has dropped or settled the majority of its lawsuits against crypto firms and has signalled a far more accommodating stance. Meanwhile, Bitcoin is increasingly being adopted as a reserve asset by a number of U.S. states and several emerging market governments. The attitude towards Bitcoin has completely changed.

Not only that, but the success of Strategy (formerly MicroStrategy), the world’s first corporate Bitcoin treasury, has been phenomenal. The company’s share price has soared nearly 900% in the past two years, driven almost entirely by its aggressive Bitcoin accumulation strategy. While many companies are navigating difficult market conditions — from tightening margins to stagnating growth — Michael Saylor is enjoying the returns on his early Bitcoin buys. This is an attractive prospect for other businesses, especially considering that Strategy’s original purpose was enterprise software — a far cry from the Bitcoin giant it has become today. Many believe they can emulate his success. They are, however, sorely mistaken.

Saylor’s safety net

There are several reasons for this. Firstly, Michael Saylor had a huge first-mover advantage, having started his Bitcoin buying spree in August 2020. His average BTC purchase price is just over $70,000, around 40% below the current price. As such, he can easily weather a significant correction and has publicly stated his intention to do so.

Strategy now holds 601,550 BTC — a whopping 2.87% of total supply. If we assume that Strategy’s total liabilities are around $10-$11 billion in debt and equity repayments, this still makes the breakeven price somewhere around the $18,000 mark, an extremely unlikely sell-off for an asset now trading close to the $120,000 mark.

Even then, since a large proportion of the purchases were funded via convertible bonds, this debt can be restructured. Plus, unlike an exchange or a trading firm, Strategy isn’t subject to forced liquidations. So, in actual fact, Saylor will almost certainly weather any upcoming market downturn easily.

Copycats beware

Other corporate treasuries aren’t in quite such a favorable position. GameStop, for example, bought 4,710  BTC in May 2025 — about $513 million — likely at an average price above $100,000. If it chooses to continue this strategy now, it will be averaging in at an even higher price. Other players coming into the market now, like Spanish coffee chain Vanadi Coffee, are buying at similar or even higher prices.

Projections for the BTC price top this cycle vary, but $150,000 is widely considered a reasonable target. That’s only around a 25% gain from today’s level — but more importantly, the closer Bitcoin gets to this figure, the greater the risk of a major correction. Even before that point, a mid-cycle correction of 30–40% would not be unusual, particularly as volatility tends to spike near the top of market cycles.

Michael Saylor won’t bat an eyelid if or when this happens, because he agreed on highly favorable terms on his financing — including several 0% convertible bond offerings, and debt structured with long maturities and low conversion thresholds. Others, on the other hand, are accepting much worse terms in their haste to copy the strategy. Sequans Communications, for instance, raised $384 million to buy Bitcoin through a mix of discounted equity and secured convertible debt. The structure increases risk for shareholders and leaves the company vulnerable if Bitcoin’s price falls.

A threat to stability

For companies like these — and likely others yet to disclose their Bitcoin holdings — a 30–40% drop could trigger shareholder pressure, credit issues, or even forced liquidation. If enough of these entities are exposed and act simultaneously, they could flood the market with Bitcoin at precisely the wrong moment. We’ve already seen how large sales can rattle the market: in July 2024, when the German government sold more than 50,000 BTC seized from a piracy site, the price dropped sharply, and sentiment deteriorated for weeks.

On top of an already deep correction, this could plausibly trigger a cascade of selling and a broader rout, bringing down not only the companies that pivoted recklessly but also hurting the wider financial ecosystem. Whether Bitcoin advocates like it or not, BTC is becoming increasingly entangled with traditional finance.

BlackRock’s spot Bitcoin ETF is now a $85 billion behemoth, and institutional allocators, from hedge funds to pension plans, are adding BTC to their portfolios. Governments and states are exploring Bitcoin reserves. Once an asset reaches this level of systemic exposure, reckless corporate investing becomes a financial stability issue.

And pivoting to Bitcoin as a last-ditch effort to save a struggling business line is nothing if not reckless. Given Bitcoin’s ongoing volatility — even if it has decreased compared to earlier cycles — things can unravel quickly. So, instead of trying to emulate Michael Saylor, businesses would do better to focus on their products and services, their customers, and their strategy — that’s how they prepare for an economic downturn.