Hyperbitcoinization without brakes: who won't survive the "bear market"

Hyperbitcoinization Without Brakes: Who Will Not Survive the Bearish Market

The number of companies with digital gold in reserves continues to grow — along with the volume of coins on their balances. This trend attracts the attention of investors and intensifies the asset's scarcity, fueling demand.

Initially, this approach was considered an experiment. However, interest in it noticeably increased after Michael Saylor's Strategy (, previously MicroStrategy), went all-in in 2020 — aggressively buying the first cryptocurrency using stocks and debt financing.

This bold move has become a signal for other businesses seeking protection from fiat devaluation, ways to diversify assets, and potential profits from the rapid rise in the price of digital gold.

As of today, more than 200 public and private companies around the world have chosen a similar strategy, accumulating a total of over 1 million BTC.

Like any market, the cryptocurrency market develops cyclically, characterized by increased volatility and unpredictability. The bearish phase is just around the corner, and it will soon become clear what weaknesses are inherent in the "Strategy Strategy" and how vulnerable lesser-known copycat companies are.

Bitcoin Proxy

According to BitcoinTreasuries data as of July 31, public and private companies hold over 1.35 million BTC with a total value of more than $160 billion — >6.4% of the total issuance of the first cryptocurrency.

Bitcoin volumes at public and private companies, ETFs, and governments. Source: BitcoinTreasuries. Such firms are also referred to as "bitcoin proxies" since their stock prices usually correlate closely with the price of digital gold.

"The logic is simple: if the first cryptocurrency rises in price, the stocks of companies also go up, giving investors indirect access to the digital asset," it is explained in the material from Cointelegraph.

Holding such stocks is a way to profit during the bullish phase of the crypto market. The strengthening of the Bitcoin price improves the financial performance of companies and attracts those who want to profit from the growth of the asset without directly buying coins.

Thus, the capitalization of Strategy has increased dozens of times since August 2020 — it was then that the Nasdaq-listed company first purchased bitcoins for its balance.

The dynamics of Strategy stock prices over the last five years. Source: Google Finance However, such rapid growth does not come without serious risks. Bitcoin remains a highly volatile asset, even if its price now shows less frequent "roller coasters". In this context, the financial stability of Strategy is called into question, and even more so for many of its followers.

Capital Dilution

In June 2025, Matthew Sigel, head of digital assets at VanEck, pointed out the risks associated with the "trend" of corporate Bitcoin reserves.

No public BTC treasury company has traded below its Bitcoin NAV for a sustained period.

But at least one is now approaching parity.

As some of these companies raise capital through large at-the-market (ATM) programs to buy BTC, a risk is emerging: If the stock trades at or near…

— matthew sigel, recovering CFA (@matthew_sigel) June 16, 2025

In particular, the expert pointed out the threat of "capital dilution" — a situation where the value of a company decreases despite having bitcoins in its assets.

According to the expert, an important aspect is how exactly companies finance their purchases: through the issuance of new shares or by attracting debt capital.

If the shares are trading at a premium to its net asset value (NAV), a new issuance may be beneficial for stakeholders – as the company raises more funds than it is worth. This is exactly what Strategy did by issuing stocks and bonds to replenish its bitcoin reserves.

However, this model is only stable at high asset prices. When the price of the securities approaches NAV, new issuances dilute the shareholders' stakes without bringing additional value. As a result, quotes fall — investments in bitcoin are no longer sufficient to support the price.

Semler Scientific: how the bet on bitcoin "backfired"

The American company Semler Scientific, specializing in medical technologies, once attracted considerable attention — its shares skyrocketed immediately after the firm acquired several hundred bitcoins, following a trendy strategy.

In May 2024, company representatives referred to digital gold as the "main reserve asset of the treasury," as it is a "reliable store of value and an attractive investment."

By the end of the year, the stocks peaked above $70, but by the middle of 2025, they had dropped by more than 45%, despite the rise in the price of the first cryptocurrency.

The dynamics of Semler Scientific's stock prices. Source: Yahoo Finance As of August 1, Semler Scientific holds 5021 BTC on its balance sheet, ranking 15th in the BitcoinTreasuries list. The digital gold in its reserves is valued at approximately $576 million, while the company's market capitalization is around $491 million.

The largest publicly traded companies holding Bitcoin. Source: BitcoinTreasuries (data as of August 1 )This is a serious signal of distrust from investors, who value Semler below the worth of its Bitcoin assets.

The situation highlights the risks of excessive dependence on a volatile asset like Bitcoin. During a growth period, it can increase the value of corporate reserves, but at the same time, it amplifies instability and can weaken the company's position, including its stock price.

If the situation does not change, Semler will find it difficult to attract capital through the issuance of new securities. With the low price of the latter, this will lead to the dilution of the shares of existing shareholders.

"As a rule, when new securities are issued, companies sell them at the current market price. If the price is low, it can lead to the dilution of existing shareholders' stakes," explained Cointelegraph analyst Dilip Kumar Patayra.

According to him, such a scenario occurs when a company's financial strategy leads to a decrease in its overall value.

"Essentially, the company risks losing the trust of investors, which could undermine its ability to grow and implement its business strategy for a long time," the expert emphasized.

Hidden Risks

Sharp crashes in the cryptocurrency market are not a rarity, but a statistical regularity. This means that corporate reserves are exposed not only to the risk of volatility of the dominant asset but also to failures at the industry level as a whole.

"Systemic risks of blockchain often remain overlooked. Mass liquidations, interdependencies of tokens, and failures on centralized exchanges can trigger sharp price crashes. These threats are rarely accounted for in traditional liquidity and reserve management," noted Patayrya.

To operate successfully in the new conditions, companies need to assess the situation soberly and carefully develop risk management models. Otherwise, the likelihood of capital loss, dilution of investor shares, and even complete strategy failure increases, the expert emphasized.

The Collapse of Lehman Brothers and the 2008 Crisis in Retrospect

On the eve of the financial crisis of 2007–2008, many banks were striving for rapid growth, actively using borrowed funds. For example, Lehman Brothers and Bear Stearns invested in risky mortgage-backed securities and derivatives, relying on leverage.

When asset prices began to decline, giant companies faced a liquidity shortage and were unable to fulfill their obligations — this triggered a chain reaction in the market.

In September 2008, Lehman filed for bankruptcy. Faced with a severe liquidity crisis, Bear Stearns was forced to sell its business to JPMorgan Chase in an emergency. The model based on price growth only worked as long as the market was moving "north." When the trend changed — the system collapsed.

Companies that acquire Bitcoin by issuing new shares and/or borrowing funds face similar risks. When the cryptocurrency price drops sharply, access to capital decreases, debts increase, and the room for maneuver disappears. In such a situation, banks and large insurers like AIG once found themselves — they bet on complex derivatives and ultimately had to seek government assistance.

The main lesson: it is not only excessive debt and high leverage that are dangerous, but also excessive euphoria. Confidence in endless growth dulls the perception of risk, which can lead to serious destabilizations, especially when the market moves in the "wrong" direction.

Gloomy forecast

On-chain analyst James Chek predicted the collapse of many Strategy imitators. In his opinion, the model of increasing capitalization through corporate Bitcoin reserves may prove to be less sustainable than expected.

For most new participants in this segment, it may be that "everything is already behind," noted Chek. Companies adhering to the "Strategy strategy" will find it harder to attract capital, as investors will prefer earlier followers.

The expert agreed with Taproot Wizards co-founder Udi Wertheimer: many companies view Bitcoin as a tool for quick profit, without delving into its fundamental idea.

The Blockware report notes that digital gold is being purchased most actively either by new enterprises or by little-known unprofitable firms.

"The corporate race for Bitcoin is mainly led by either new companies or dying ones that you have never heard of," analysts said.

The venture firm Breed noted that only a few companies with digital gold on their balance sheets will be able to maintain resilience and avoid the "death spiral." The latter poses a threat to companies whose stocks are trading close to NAV.

"Death Spiral" of companies with bitcoin treasuries. Source: Breed. The necessity to refinance debts amid reduced ability to attract capital will force such companies to partially liquidate reserves. Sales will put pressure on the price of bitcoin and may trigger a cascading effect, the authors of the report believe.

I think we’re in a fairly advanced stage of the Bitcoin treasuries saga.

I’m also pretty confident they’ll play a key role in the next bearish market.

The music stops when the NAV premium starts to slowly fall ( or even turn negative with ATMs), and raises become smaller or fail… pic.twitter.com/tce5zjFMqY

— Saint Pump (@Saint_Pump) July 12, 2025

"I am sure they [crypto reserves] will play an important role in the next bearish market," wrote the crypto trader under the nickname Saint Pump.

Hyperbitcoinization

Blockstream CEO Adam Back believes that investing in shares of public companies with bitcoin reserves could become a profitable alternative to altseason for speculators.

According to him, such firms regularly replenish their reserves of the first cryptocurrency, which pushes their quotes up and makes the shares attractive to investors.

Although the raised funds are not always directed straight into Bitcoin, they allow companies to continue making purchases, thus supporting the demand for the asset.

In April, Beck stated that purchasing the first cryptocurrency into corporate reserves leads to sustainable "hyperbitcoinization," which will increase its market capitalization to $100–200 trillion.

Blockware researchers expect that by the end of 2025, at least 36 new public companies will add their first cryptocurrency to their balance sheet.

"This is just the beginning. In the next six months, we expect at least three dozen companies to include bitcoin in their treasuries," analysts suggested.

VanEck Tips

Matthew Siegel from VanEck advises "hyperbitcoinized" companies to act proactively to avoid capital loss. Among his suggestions:

  • suspension of additional stock issuance. If the company's shares trade below 95% of NAV for ten consecutive days, new issuances should be temporarily halted to avoid diluting shareholders' stakes.
  • buyback. If the stock price significantly lags behind the price of Bitcoin, it is advisable to consider a buyback — it will help reduce the discount to net asset value and concentrate shares in the hands of fewer investors;
  • revisiting the approach. If stocks trade below NAV for an extended period, it may be worth radically rethinking the business strategy. Options include mergers, spin-offs, or a complete abandonment of the current model;
  • motivation of top management. The compensation of the management should depend on the company's value per share, rather than the total amount of bitcoins on the balance sheet. This will help avoid excessive accumulation of the asset and strengthen the focus on sustainable growth.

In turn, Dilip Kumar Patayra recommends:

  • be prepared for volatility: the price of bitcoin can resemble a real "roller coaster", especially amid global financial upheavals or even announcements of "liberation tariffs" from Donald Trump;
  • assess risks: despite significant potential, bitcoin remains a high-risk asset, so it is not advisable to concentrate your entire investment portfolio in it;
  • do not chase short-term profits: when aiming for long-term growth, one should not react impulsively to temporary dips ( although sharp declines can indeed lead to significant losses );
  • thoughtful risk management: it is advisable to define the strategy in advance: set key levels, and fix entry and exit points.

Conclusions

Companies that hold Bitcoin in reserves are often in the media spotlight and are perceived as more innovative and promising market players.

However, the Semler example shows that even against the backdrop of a bullish market phase, stocks can depreciate. Without a well-thought-out strategy, "hyperbitcoinization" is fraught with significant financial losses.

VanEck's insights are based not on guesswork, but on experience accumulated in both traditional finance and the cryptocurrency space.

Ultimately, it is not important who has more digital gold, but who can survive the downturn and consolidation period while maintaining the company's fundamental indicators.

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