Bitcoin Treasuries Are Ticking Time Bombs as Leverage Hits Record Rates, Warns Capriole’s Charles Edwards

A Year-Old Warning Resurfaces

Bitcoin treasury companies are taking connected indebtedness astatine grounds rates to money their bitcoin purchases, Capriole Investments laminitis Charles Edwards warned. He tied the inclination backmost to a telephone helium made successful October 2025, arguing that the integer plus treasury (DAT) exemplary is structurally incentivized to trust connected borrowing to manufacture returns, further adding:

“ Bitcoin DATs are levering up astatine grounds rates. Back successful Oct 2025 I warned precisely this would hap arsenic this unsustainable concern exemplary is incentivised to trust connected indebtedness to make fake ‘yield’.”

Chart showing crypto treasury companies’ increasing debt, per Capriole

His halfway objection is to however the strategy generates its header returns. A integer plus treasury, oregon DAT, is simply a nationalist institution that raises superior (often done indebtedness oregon stock sales) to accumulate bitcoin connected its equilibrium sheet. The model, pioneered by Strategy Inc. (Nasdaq: MSTR), tin amplify gains erstwhile bitcoin rises, but it besides adds leverage truthful that erstwhile prices fall, firms that borrowed to bargain tin look unit to rise cash, work debt, oregon sell.

The 1929 Comparison and “Fake Yield” Narrative

Earlier this year, Edwards compared the accelerated buildout of DATs to the leveraged concern trusts of 1929, calling them a “ leverage detonation waiting to happen.” He pointed to the astir 200 bitcoin treasuries present successful beingness and argued that the much they lever up, the much a drawdown tin cascade done forced deleveraging, with each seller pushing the terms little for the next.

Moreover, his “fake yield” complaint cuts astatine however treasury firms marketplace themselves, fixed that galore tout a bitcoin-per-share maturation metric arsenic a signifier of yield. Edwards contends the fig is mostly a merchandise of issuing caller indebtedness and shares alternatively than genuine income. In simpler terms, it tin beryllium viewed arsenic a flywheel that works lone portion superior markets enactment unfastened and prices enactment high.

Image source: X

With truthful galore nationalist companies and exchange-traded funds (ETFs) present holding bitcoin, a synchronized unwind, successful his view, could crook an mean correction into thing sharper.

The Strain Is Already Showing

The informing arrives arsenic the treasury exemplary faces existent stress, with Bitcoin.com News reporting earlier this period that bitcoin treasury companies are facing a borrow-or-sell test, with the question shifting from accumulation to liquidity (i.e. however firms money dividends, indebtedness costs, and different commitments without cutting BTC exposure).

That unit has reached the apical of the marketplace arsenic Cryptoquant information showed treasury buying extracurricular Strategy has collapsed with non-Strategy firms buying a combined 1,000 BTC implicit 30 days, a 99% driblet from an August 2025 peak. Consequently, Strategy present holds astir 76% of each firm bitcoin.

Others are leaning harder into leverage. Japan’s Metaplanet, for instance, executed astir 20 rounds of debt-for- BTC financing successful astir 2 years, including zero-coupon bonds, arsenic it chases a 100,000 BTC target. Bitcoin.com News reported the institution posted a $725 cardinal quarterly loss adjacent arsenic its stack reached 40,177 BTC.

Why It Matters Now

Bitcoin precocious posted its worst week since the 2022 FTX collapse, sliding beneath $60,000 arsenic grounds exchange-traded money (ETF) outflows deed the market. In a downturn, the fiscal engineering that powered the treasury roar connected the mode up tin enactment successful reverse, pressuring the astir indebted firms first.

Looking ahead, if BTC recovers, the leverage that worries Edwards could erstwhile again look similar savvy fiscal engineering. If the downturn drags on, the astir leveraged treasuries volition beryllium the archetypal to consciousness it.