A recent report from venture capital firm Breed suggests that only a small number of Bitcoin treasury companies will survive a potential "death spiral," impacting BTC holding companies trading close to their net asset value (NAV). The report emphasizes that the ability of these companies to command a multiple of their net asset value (MNAV) is crucial for their long-term health.
Breed's report outlines a seven-phase decline for BTC treasury companies. It starts with a drop in Bitcoin's price, which triggers a decline in MNAV, causing a company's share price to approach its actual NAV. This makes it harder for BTC holding companies to secure debt and equity financing, which is critical for converting the inflationary US dollar into a supply-capped, appreciating asset. As access to credit dries up and debt maturity looms, margin calls are triggered, forcing firms to sell BTC into the market, further lowering the price and potentially triggering a prolonged market-wide downturn. Ultimately, the report suggests that only a select few companies will sustain a lasting MNAV premium through strong leadership, disciplined execution, savvy marketing, and distinctive strategies that grow Bitcoin-per-share regardless of broader market fluctuations.
The "death spiral" could trigger the next crypto bear market. However, the report also notes that since most BTC treasury companies currently finance their purchases with equity rather than debt, the implosion may be contained. This situation could change if debt financing becomes more prevalent than equity financing.
Concerns exist around leverage, as some companies use convertible debt to finance crypto purchases, which can backfire if token prices fall. In a sharp correction, companies may be forced to sell assets, triggering a downward spiral in both token prices and stock prices. To pay convertible debt, companies may need to sell their underlying treasury crypto assets, causing the price to decline.
Despite these challenges, Bitcoin treasury companies have become a significant trend in 2025. These companies treat BTC as a primary corporate asset rather than a side investment. Recent research counts at least 126 publicly traded companies with bitcoins on their balance sheets, holding a combined 819,857 BTC, almost 4% of the total 21 million supply. Some companies, like MicroStrategy, have seen their stock performance increase significantly since adopting this strategy.
Companies are also deploying their Bitcoin to generate operating revenue through collateralized lending, derivatives arbitrage, and Lightning Network payment services. This could lead to higher returns, attracting more capital, tightening the circulating supply, and supporting the long-term price of Bitcoin.
Bitcoin Treasury Corporation (BTCT), a Canadian-based company focused on institutional-grade Bitcoin services, recently completed the initial phase of its Bitcoin accumulation plan, acquiring 478.57 Bitcoin for CAD$70 million. The Corporation now holds 771.37 Bitcoin on its balance sheet and plans to deploy its holdings through institutional lending and liquidity services. BTCT's strategy reflects a growing trend among crypto companies to treat Bitcoin as a speculative asset and a tool for liquidity, lending, and capital efficiency. The company's common shares resumed trading on the Toronto Stock Exchange (TSX) Venture Exchange.
