In 2025, Bitcoin becomes a new focus of corporate asset allocation, with many listed companies rushing to invest heavily in Bitcoin and waiting for appreciation. However, the venture capital firm Breed warns that there are structural risks hidden behind this trend, and most companies focused on 'hoarding' Bitcoin may fall into a 'death spiral,' especially those whose market value is close to net asset value (NAV, total assets minus liabilities), ultimately leading to market elimination with few survivors.

The Breed report bluntly states that the key to this brutal game is not how much Bitcoin a company holds, but whether the company can maintain the 'market value to net asset value premium' (Multiple on Net Asset Value, MNAV) over the long term. Only by preserving this premium can a company continue to gain the trust of the capital market and promote a long-term holding strategy.

In this regard, Breed has also detailed how a listed company with Bitcoin reserves can enter the 'death spiral' in '7 stages':

  1. Bitcoin price declines;

  2. MNAV premium converges, company market value approaches actual net asset value;

  3. Capital market loses confidence, making it difficult for companies to raise funds;

  4. Unable to conduct asymmetric transactions to exchange Bitcoin for fiat currency;

  5. Financing chain breaks, debt maturity pressure emerges, triggering margin calls;

  6. Companies are forced to sell Bitcoin to stem losses, exacerbating selling pressure on Bitcoin;

  7. Weak companies face mergers or eliminations, pushing the market into a long-term bear market.

Breed's report points out that companies that can truly break through in such a severe cycle must possess the following characteristics: strong leadership, disciplined execution strategies, flexible and visionary marketing plans, and a unique business model that can continuously enhance the 'Bitcoin holdings per share' even amid market fluctuations.

Is equity financing a firewall? Risks may still shift.

It is worth noting that Breed also mentioned that since most Bitcoin financial companies currently rely mainly on 'equity financing' rather than large-scale debt operations, the overall market risk is still controllable. 'Even if individual companies face difficulties, as long as they do not engage in large-scale leveraged operations, the collapse effect will not spread comprehensively.'

However, Breed warns that this relatively safe situation may only be temporary. Once market sentiment turns, and companies rush to leverage debt to increase their Bitcoin holdings, it may exacerbate risk spillovers, leading to a chain reaction similar to a financial crisis.

Since Strategy (formerly MicroStrategy) CEO Michael Saylor first incorporated Bitcoin into the company's balance sheet in 2020, initiating the so-called 'Bitcoin corporate asset allocation' trend, this trend has reached its peak in 2025.

According to BitcoinTreasuries data, more than 250 institutional entities have included Bitcoin in their asset allocation, covering corporations, government entities, ETFs, pension funds, and even cryptocurrency service providers, becoming a new generation of hedging tools against fiat currency inflation and monetary policy uncertainty.

However, ultimately, who can win will still depend on whether the company has a robust strategy and the ability to dynamically adjust its capital structure.

  • This article is reprinted with permission from: (Block Geek)

  • Original title: (Corporate 'Hoarding' is not a panacea! VC warns: Bitcoin financial companies may fall into the 'death spiral')

  • Original author: Block Girl MEL

'Venture Capital warns! Corporate hoarding is not a panacea, and Bitcoin reserve companies may fall into a death spiral?' This article was first published in 'Crypto City'

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