Source: Wall Street Journal
Original Title: Businesses Are Bingeing on Crypto, Dialing Up the Market's Risks
Compiled and Organized by: BitpushNews
Approximately 60 companies previously unrelated to crypto have adopted the so-called Bitcoin Treasury strategy promoted by Michael Saylor.
For an increasing number of companies unrelated to cryptocurrency, purchasing Bit is becoming a trend, as they believe digital assets can boost their stock prices.
Some industry insiders say the problem is: this could expose cryptocurrency to new risks, amplifying sell-offs during market volatility.
This approach was pioneered by Bit evangelists like Michael Saylor, who transformed his software company Strategy into a digital currency "warehouse". Other companies have followed suit.
According to Standard Chartered Bank, citing data from BitcoinTreasuries.net, about 60 companies previously unrelated to the market are implementing the "Bit Treasury strategy", operating in software, marketing, and healthcare services. Some companies are not only buying Bit but also purchasing large amounts of tokens with relatively smaller market caps like ETH, Solana, and XRP.
Some industry insiders believe these companies are digging their own graves.
They say, first, digital assets have historically been highly volatile. If Bit or other crypto tokens experience a sharp decline, it could also lower the value of company stocks. More worryingly, if they initially borrowed heavily to purchase cryptocurrencies, a sharp decline could force companies to sell their tokens—thus accelerating sell-offs.
Elliot Chun, partner at Architect Partners, stated: "In such a short time, our industry has possibly never seen such large-scale capital activity related to cryptocurrency. We must be careful because while it looks great when it rises, it will be devastating when it falls."
These purchases (or merely announcing such plans) often cause company stock prices to soar.
At least six companies announced their crypto treasury plans last week alone. Bankers and analysts say the number of such companies should continue to grow as Bit trading prices approach historical highs and Trump becomes one of the crypto industry's most steadfast supporters.
All this emerging interest in hoarding crypto has attracted Wall Street's attention, with bankers now competing to help companies finance token purchases.
On June 2nd, SharpLink Gaming, a sports betting marketing company, announced completing a $425 million private placement led by ConsenSys Software, becoming the largest publicly listed ETH enterprise holder. However, the announcement caused SharpLink's Nasdaq-listed stock to drop 28%.
The next day, a Canadian renewable energy company called SolarBank performed better, with its stock closing up over 1% after announcing its Bit treasury strategy. Subsequently, on Wednesday, K-pop media company K Wave Media's stock surged over 130% after revealing plans to sell up to $500 million in stock to acquire Bit.
Architect Partners' data shows that last week's announcements brought the total capital for crypto treasury strategies to approximately $11.3 billion since early April. This includes Trump's media company's plan to raise $2.5 billion from investors to purchase Bit, and the debut of Twenty One Capital, a Bit hoarding company supported by Tether and SoftBank.
Trump Media and Technology Group, controlled by the Trump family, announced last week that it sold over $1.4 billion in stock and $1 billion in zero-coupon convertible debt to fund its Bit purchase, calling it "one of the largest Bit treasury transactions of any public company". The company also filed a registration statement with regulators, which would allow it to issue up to $12 billion in stocks, bonds, and other securities.
According to Eric Trump, the Trump family-backed crypto enterprise World Liberty Financial also revealed plans last Friday to purchase a "substantial position" of the president's namesake meme coin for the company's "long-term treasury".
Eric Trump speaking at the Bitcoin 2025 conference in Las Vegas last month. Image source: Wall Street Journal
Timing is crucial. Recently joining companies are likely purchasing Bit and other tokens at higher prices than early adopters like Strategy.
For instance, Geoff Kendrick, global digital assets research head at Standard Chartered Bank, stated that if Bit drops below $90,000 (just 15% lower than its current $106,000), about 30 publicly listed companies' crypto holdings would be at a loss.
Companies adopting crypto treasury strategies solely to boost stock prices face even greater risks. Chun from Architect Partners says many stock investors are seeking quick returns and are likely to quickly exit if prices plummet after macroeconomic events or if cybercriminals launch attacks.
He said: "Once things turn bad, they have no motivation to stay."
Nevertheless, some analysts believe not all crypto treasury companies are the same. Brett Knoblauch, digital assets research director at Cantor Fitzgerald, suggests that enterprises led by prominent industry figures are more resilient to economic downturns compared to those merely trying to ride Bit's momentum.
He noted that Saylor is the type of figure who can continuously drive interest in Bit treasury companies.
Knoblauch said: "Interest generates trading volume, trading volume creates financing capabilities, financing capabilities enable purchasing more Bit—that's the flywheel effect. Many zombie companies might be buying Bit and trying to do the same, but without the flywheel effect, it's difficult to succeed."
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