Will Listed Companies’ Crypto Treasury Strategies Repeat the Grayscale GBTC “Blow-Up” Script?
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Will Listed Companies’ Crypto Treasury Strategies Repeat the Grayscale GBTC “Blow-Up” Script?
MicroStrategy has attracted a wave of imitators, but what are the leverage risks behind the high premium?
Navigating Web3 tides with focused insightsBy Weilin, PANews
Crypto treasuries have become the "trendy strategy" for public companies. According to incomplete statistics, at least 124 publicly listed companies have incorporated Bitcoin into their corporate financial strategies, using it as a "weapon" on their balance sheets to attract significant attention from the crypto market. Meanwhile, treasury strategies involving Ethereum and altcoins such as Solana (SOL) and XRP are also being adopted by some firms.
Nonetheless, several industry insiders, including Nic Carter, partner at Castle Island Ventures, have recently voiced underlying concerns: these public investment vehicles resemble Grayscale's GBTC—the Bitcoin trust fund that once traded at persistent premiums—whose shift from premium to discount triggered the collapse of multiple institutions.
Geoff Kendrick, Head of Digital Assets Research at Standard Chartered, also issued a warning: if Bitcoin’s price falls below 22% of the average purchase price held by these crypto treasury firms, it could trigger forced corporate sell-offs. Should Bitcoin drop below $90,000, approximately half of these companies’ holdings could face loss-making risks.
MicroStrategy Sparks Imitators—But What About the Leverage Risk Behind High Premiums?
As of June 4, MicroStrategy holds approximately 580,955 bitcoins, with a market value of about $61.05 billion. Yet its company market capitalization stands at $107.49 billion, reflecting a premium of nearly 1.76x.
Beyond MicroStrategy, other recent adopters of Bitcoin treasury strategies also boast prominent backing. Twenty One, supported by SoftBank and Tether, went public via a Cantor Fitzgerald SPAC, raising $685 million entirely for Bitcoin purchases. Nakamoto Corp, founded by Bitcoin Magazine CEO David Bailey, merged with a listed healthcare firm to raise $710 million for Bitcoin acquisition. Trump Media & Technology Group has announced plans to raise $2.44 billion to build its Bitcoin treasury.
PANews recently reviewed how MicroStrategy’s Bitcoin treasury model has drawn numerous followers, including SharpLink—which plans to buy Ethereum—Upexi, accumulating SOL, and VivoPower, stockpiling XRP—among other listed firms.
However, several crypto industry professionals point out that these companies’ operational patterns structurally mirror the old GBTC arbitrage model. Once a bear market hits, risks could concentrate and trigger a “stampede effect”—a chain reaction where falling prices spark panic selling, driving prices even lower.
The Grayscale GBTC Lesson: Leverage Collapse and Institutional Blowups
Looking back, Grayscale Bitcoin Trust (GBTC) was once a star performer during 2020–2021, trading at premiums as high as 120%. But starting in 2021, GBTC rapidly shifted into negative premium territory, eventually becoming a key catalyst behind the collapses of Three Arrows Capital (3AC), BlockFi, and Voyager.
GBTC’s design functioned essentially as a one-way, “in-only” mechanism: investors purchasing shares in the primary market faced a six-month lock-up before they could trade them on secondary markets—and crucially, had no ability to redeem shares for actual Bitcoin. Due to high entry barriers and tax burdens associated with direct Bitcoin investment early on, GBTC became a legal gateway for qualified investors (including those using U.S. retirement accounts like 401(k)s) to access crypto, helping sustain long-term secondary market premiums.
Yet this very premium fueled large-scale “leveraged arbitrage games”: investment firms borrowed BTC at low cost, deposited it into Grayscale to obtain GBTC shares, then sold those shares at a premium in the secondary market after the lock-up, securing steady profits.
Public filings show that BlockFi and 3AC together once held around 11% of GBTC’s circulating supply. BlockFi converted client-deposited BTC into GBTC shares and used them as collateral to issue loans and pay interest. 3AC took it further, leveraging up to $650 million in unsecured loans to accumulate more GBTC, which it then pledged as collateral on Genesis—the lending platform under DCG—to unlock liquidity and layer additional leverage.
This system worked smoothly during the bull run. But when Canada launched Bitcoin ETFs in March 2021, demand for GBTC plummeted, flipping its premium into a discount and instantly collapsing the flywheel.
BlockFi began suffering continuous losses under negative premium conditions—forced to dump large amounts of GBTC, it still incurred cumulative losses exceeding $285 million in 2020 and 2021, with industry estimates suggesting its GBTC-related losses approached $700 million. 3AC was liquidated outright. Genesis ultimately announced in June 2022 that it had “disposed of the collateral assets of a major counterparty.” Though unnamed, the market widely believed this counterparty was 3AC.
This blowup—born from premium, amplified by leverage, and destroyed by liquidity collapse—marked the opening chapter of the systemic crisis that engulfed the crypto industry in 2022.
Will the Public Company Crypto Treasury Flywheel Trigger the Next Systemic Crisis?
Following MicroStrategy, an increasing number of companies are building their own “Bitcoin treasury flywheels,” operating on the logic: rising stock price → equity financing → buying BTC → boosting market confidence → further stock appreciation. This treasury flywheel may accelerate further as institutions increasingly accept crypto ETFs and crypto holdings as loan collateral.
On June 4, JPMorgan Chase announced plans to allow its trading and wealth management clients to use certain crypto-linked assets as collateral for loans. According to insiders, the bank will begin offering financing against crypto ETFs in the coming weeks, starting with BlackRock’s iShares Bitcoin Trust. In select cases, JPMorgan will also start factoring clients’ crypto holdings into assessments of total net worth and liquid assets. This means cryptocurrencies could soon be treated similarly to stocks, cars, or art when calculating available collateral limits.
However, skeptics argue that while the treasury flywheel appears self-sustaining during bull markets, it effectively ties traditional financial instruments—such as convertible bonds, corporate debt, and ATM offerings—directly to crypto asset prices. If the market turns bearish, this chain could break.
A sharp decline in coin prices would rapidly erode corporate financial assets, damaging valuations. Investor confidence would collapse, stock prices would fall, and companies’ fundraising abilities would weaken. If debt covenants or margin calls arise, firms may be forced to sell BTC to cover obligations. A concentrated wave of BTC selling could create a massive “sell wall,” further depressing prices.
More dangerously, if these companies’ stocks are accepted as collateral by lending platforms or centralized exchanges, their volatility could transmit directly into traditional finance or DeFi systems, amplifying risk across interconnected chains—just as happened with Grayscale GBTC.
Earlier this month, renowned short-seller Jim Chanos announced he is shorting MicroStrategy while going long on Bitcoin, citing concerns over its leverage structure. Despite MicroStrategy’s stock surging 3,500% over the past five years, Chanos argues its valuation has severely decoupled from fundamentals.
Some crypto treasury advisors warn that the emerging trend of “equity tokenization” could exacerbate risks—especially if these tokenized equities are themselves accepted as collateral by centralized or DeFi protocols, potentially triggering uncontrollable cascading effects. Still, some analysts believe we’re still in early stages, as most trading institutions have yet to accept Bitcoin ETFs as margin collateral—even those issued by giants like BlackRock or Fidelity.
On June 4, Geoff Kendrick of Standard Chartered warned that 61 listed companies now collectively hold 673,800 bitcoins—about 3.2% of total supply. If Bitcoin drops more than 22% below these firms’ average purchase price, forced corporate sell-offs could follow. Drawing parallels to Core Scientific’s 2022 case—when it sold 7,202 BTC after prices fell 22% below cost—if Bitcoin slips below $90,000, roughly half of these corporate holdings could face losses.
How great is MicroStrategy’s blowup risk? Recently, an episode of Web3 101’s podcast, “MicroStrategy, the Bitcoin Whale, and Its Capital Game,” sparked market discussion. The hosts noted that although MicroStrategy is often called a “leveraged Bitcoin proxy,” its capital structure isn’t a conventional high-risk leveraged model but rather a highly controlled “ETF-like + flywheel leverage” system. By raising funds through convertible bonds, perpetual preferred shares, and at-the-market (ATM) offerings to buy Bitcoin, the company has built a volatility narrative that continuously draws market attention. Crucially, most of these debt instruments don’t mature until 2028 or later, meaning there is virtually no short-term repayment pressure during cyclical downturns.
The core of this model isn't merely stockpiling Bitcoin, but dynamically adjusting funding methods—“adding leverage when premiums are low, selling shares when premiums are high”—to create a self-reinforcing flywheel in capital markets. Michael Saylor positions MicroStrategy as a financial conduit for Bitcoin volatility, enabling institutional investors who can't directly hold crypto to gain frictionless exposure to a high-Beta Bitcoin instrument—one that fluctuates more dramatically than Bitcoin itself. As a result, MicroStrategy not only builds strong financing capacity and antifragility but also becomes a “long-term stabilizing variable” within Bitcoin’s market volatility structure.
For now, corporate crypto treasury strategies continue to capture the crypto market’s spotlight, while sparking debate over structural risks. While MicroStrategy has constructed a relatively resilient financial model through flexible financing and cyclical adjustments, whether the broader industry can remain stable amid market volatility remains to be seen. Whether this new wave of “crypto treasury fever” will replay the GBTC-style risk trajectory is an open question—one filled with uncertainty.
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