Coinbase is sounding the alarm: Michael Saylor’s Bitcoin playbook is going viral — and it could catch fire soon.
A new report from the crypto exchange warns that the “attack of the clones” is an “alarming” wave of public companies adopting Saylor’s treasury model could create systemic risks for the crypto market.
About 228 public companies are following in Strategy’s footsteps. Collectively, they hold 820,000 Bitcoin on their balance sheet, said Coinbase. Strategy, the company formerly known as MicroStrategy, dominates the scene with 580,000 Bitcoin worth about $63 billion.
In the past thirty days, 21 firms have become Bitcoin treasury companies.
Only one purpose
So what’s the concern? The rise of what Coinbase calls publicly-traded crypto vehicles.
These are companies whose sole purpose is to raise capital — mostly through convertible debt or new stock offerings — then plough that money into Bitcoin.
But unlike early corporate adopters such as Tesla, these companies have no meaningful business models aside from accumulating Bitcoin.
Indeed, Saylor’s approach has inspired other companies such as Metaplanet and GameStop to replicate the playbook and capture massive gains.
Strategy’s stock price has skyrocketed more than tenfold since adopting its Bitcoin treasury model in 2020.
Take Metaplanet, MicroStrategy’s clone from Japan.
Formerly a budget hotel operator, at its peak, it employed 127 workers and owned dozens of properties. Walloped by the Covid-19 pandemic, CEO Simon Gerovich sold off nearly every property save one, and turned Metaplanet into a Bitcoin treasury company — with no apparent business model.
Now, the company is worth $5.5 billion.
That said, investors are trading Metaplanet’s stock as if Bitcoin trades for $596,154, more than fivefold the current market price, according to 10xResearch.
Forced selling pressure
But Coinbase analysts warn that this model concentrates new risks into the Bitcoin market itself. Chief among them is what they’re calling forced selling pressure.
Many of these companies have issued convertible notes — debt instruments that allow investors to convert loans into stock.
If Bitcoin’s price falters or stock prices slump, companies may be forced to service those debts by selling off Bitcoin holdings. That could create a negative feedback loop that forces more selling and even lower prices.
“The fear is that indiscriminate selling by many entities at once (to service those debts) could lead to market liquidations and a sell-off in crypto more broadly.” Coinbase said.
Even without debt defaults, “motivated discretionary selling” — where companies offload Bitcoin to fund operations or avoid risk — could spook markets and trigger broader sell-offs.
Accumulating risk
To be sure, Coinbase doesn’t expect an immediate crisis.
Most of the debt across these companies doesn’t mature until 2029 or 2030. Saylor holds $3 billion in convertible notes, for example, which don’t come due until late 2029, though an early redemption window opens in late 2026.
Still, Coinbase warns that as more firms embrace this model — and as debt levels rise — the risks will accumulate.
Meanwhile, Saylor remains not just undeterred, but keen to apply new forms of financial engineering.
Perpetual financing scheme
On Tuesday, he pitched his latest move: a $1 billion preferred stock offering. It’s another twist in his ongoing effort to use perpetual financing to acquire more Bitcoin.
Strategy’s executive chairman has his eyes set on the $100 trillion corporate bond market.
Saylor said that issuing preferred stock — which pays dividends but never matures — allows Strategy to sidestep the refinancing risk that comes with traditional corporate bonds.
The move, however, caught the attention of legendary short seller Jim Chanos, who has called Saylor’s latest gimmick “complete financial gibberish.”
Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at [email protected].
