VanEck warns: Why Bitcoin treasury companies could face capital erosion

Why are companies embracing Bitcoin arsenic portion of their firm treasury strategy?

In caller years, an expanding fig of companies has embraced Bitcoin arsenic portion of their firm treasury strategy. This trend, initially seen arsenic experimental, gained momentum erstwhile Strategy, a US-based bundle company, started converting its currency reserves into Bitcoin (BTC) backmost successful 2020. 

Strategy’s determination sparked wide involvement among different businesses seeking a hedge against fiat currency debasement and the imaginable for Bitcoin’s terms appreciation.

By mid-2025, implicit 220 nationalist companies worldwide had adopted akin strategies, collectively holding astir 592,100 BTC (roughly $60.03 cardinal successful worth arsenic of June 23, 2025). This has led to the instauration of what immoderate telephone “Bitcoin proxies,” stocks whose values mostly reflector Bitcoin’s terms fluctuations. The attraction is clear: When Bitcoin’s terms rises, these companies’ banal prices soar, giving investors an indirect way to summation vulnerability to Bitcoin.

For these companies, holding Bitcoin brings galore benefits. During bullish crypto marketplace cycles, the worth of their Bitcoin reserves tin rapidly appreciate, boosting their equilibrium sheets and attracting investors looking for crypto vulnerability without buying the integer plus directly. 

Some executives adjacent tout Bitcoin arsenic “digital gold,” presenting it arsenic a semipermanent store of worth that tin support against inflation. Strategy’s chairman, Michael Saylor, has argued that Bitcoin could outperform currency arsenic a store of worth implicit time. This strategy has paid disconnected for immoderate companies; Strategy’s banal price, for instance, has risen astir tenfold since it began its Bitcoin acquisition successful 2020.

However, contempt the imaginable rewards, the risks are significant. Bitcoin is highly volatile, with its terms taxable to crisp fluctuations wrong abbreviated periods. Unlike accepted firm assets, Bitcoin is not liquid oregon stable, which raises concerns astir fiscal stableness for companies that spell beyond tiny allocations and marque Bitcoin a cardinal portion of their concern strategy.

VanEck warns of superior erosion risks for Bitcoin-heavy firm treasuries

In June 2025, VanEck, a planetary plus manager renowned for its crypto concern products, raised a reddish emblem regarding the expanding accumulation of Bitcoin by firm treasuries. 

Matthew Sigel, VanEck’s caput of integer assets research, warned that immoderate companies mightiness beryllium connected the brink of “capital erosion.” In elemental terms, superior erosion occurs erstwhile a company’s worth (or shareholders’ equity) diminishes contempt the company’s holdings successful Bitcoin.

Sigel’s interest stems from however companies concern their Bitcoin purchases. Many Bitcoin-heavy firms contented caller banal oregon instrumentality connected indebtedness to raise superior for Bitcoin acquisition. 

If a company’s banal terms is precocious capable (trading astatine a premium to its nett plus value, oregon NAV), issuing caller shares tin payment existing shareholders by raising much wealth than the underlying assets are worth. This was the strategy adopted by Strategy’s Michael Saylor, who issued banal and bonds to money Bitcoin purchases erstwhile his company’s stock terms was high.

However, this exemplary is sustainable lone arsenic agelong arsenic the company’s banal terms stays elevated. If the banal terms starts to commercialized astatine oregon adjacent its NAV, caller stock issuances volition dilute existing shareholders without adding value. 

This shift, from accretive to dilutive superior raising, could pb to “capital erosion,” wherever the company’s banal terms falls arsenic the worth of its Bitcoin holdings is not capable to enactment caller investments without harming existing shareholders.

Did you know? Net plus worth (NAV) is simply a cardinal measurement utilized to measure a company’s value. It represents the quality betwixt a company’s assets and liabilities. Essentially, it’s the “book value” of a company, showing what would beryllium near for shareholders if each assets were sold and debts paid off.

How Semler Scientific’s Bitcoin-heavy strategy led to superior erosion

Semler Scientific’s Bitcoin-heavy strategy led to superior erosion, arsenic its banal terms plummeted contempt Bitcoin’s rise, highlighting the risks of over-reliance connected Bitcoin for firm treasuries.

Semler Scientific, a US aesculapian exertion firm, saw its banal initially surge erstwhile the institution adopted a Bitcoin-first treasury strategy, acquiring thousands of BTC.

However, by mid-2025, the institution faced a important issue: Despite Bitcoin’s terms climbing, Semler’s stock terms plummeted implicit 45%. At that point, Semler’s marketplace capitalization was little than the worth of its Bitcoin holdings. Market capitalization means the full worth of a company’s outstanding shares. 

If Semler’s marketplace capitalization is little than the worth of its Bitcoin holdings, it means that the marketplace is undervaluing the institution compared to its assets, which is simply a superior interest for investors.

This concern underscores the risks of over-reliance connected a volatile plus similar Bitcoin. While Bitcoin’s terms tin thrust up the worth of Bitcoin-heavy firm treasuries successful a bullish market, it besides introduces volatility risk, crisp terms fluctuations that tin wounded the company’s wide stableness and banal price.

If Semler’s banal continues to commercialized astatine a discount to its Bitcoin reserves (meaning the marketplace terms of the banal is little than the worth of its Bitcoin holdings), it could conflict to rise superior done equity issuances (issuing caller shares to rise money). Typically, erstwhile companies contented caller shares, they merchantability them astatine the existent marketplace price, which mightiness dilute existing shareholders’ worth if the banal terms is low.

This script illustrates superior erosion, a word VanEck warned about, which occurs erstwhile a company’s fiscal strategy leads to a simplification successful its value. For example, if Semler’s banal terms remains low, it volition go much hard for the institution to rise funds by issuing caller shares oregon debt, particularly if investors are uncertain astir the company’s semipermanent stability. Essentially, the institution risks losing capitalist confidence, which tin person a lasting antagonistic interaction connected its quality to turn oregon execute its concern strategy.

The hidden risks companies place successful Bitcoin treasury strategies

As Bitcoin becomes a fashionable treasury asset, galore companies absorption connected its upside portion ignoring technological and behavioral warnings. 

Behavioral concern probe shows that executives often grounds overconfidence and herd behavior, adopting Bitcoin without stress-testing semipermanent volatility. Studies besides item nonaccomplishment aversion, wherever firms hesitate to merchantability underperforming assets, risking deeper losses alternatively of making rational exits.

Scientific models besides reveal that Bitcoin’s terms follows a “fat tail” distribution. This means utmost crashes are not uncommon outliers — they’re statistically likely. This means that a firm equilibrium expanse dense with Bitcoin is exposed not lone to the asset’s ain turbulence but besides to systemic turbulence crossed the blockchain sector.

A lawsuit successful constituent is Grayscale Bitcoin Trust (GBTC). For years, it traded astatine a premium to NAV, lone to clang to a steep discount during the 2022-2023 carnivore market. Investors who entered astatine the highest saw monolithic losses adjacent though Bitcoin’s terms hadn’t dropped proportionally. The trust’s deficiency of a redemption mechanics trapped investors, a informing for treasury-heavy firms reliant connected secondary marketplace sentiment.

But wherefore did the GBTC premium disappear?

The GBTC premium vanished arsenic new, lower-fee Bitcoin concern products similar ETFs from ProShares and Valkyrie entered the market, drafting capitalist involvement away. At the aforesaid time, reduced request and tighter arbitrage opportunities made GBTC little attractive, particularly fixed its six-month lockup play and declining organization participation.

A firm treasury holding ample BTC reserves without redemption mechanisms could endure the aforesaid destiny — i.e., being forced to merchantability astatine depressed prices to conscionable indebtedness oregon equity obligations.

What’s often overlooked is blockchain’s systemic risk. Smart declaration liquidations, token interdependencies and centralized speech failures tin trigger crisp terms spirals. These risks are seldom factored into accepted treasury planning.

To navigate this landscape, companies request to spell beyond hype and physique rigorous hazard models, stress-testing Bitcoin holdings nether worst-case scenarios. Without these safeguards, firms hazard superior erosion, capitalist dilution and strategical failure. The adjacent question of adopters would payment from stress-testing their treasuries against utmost but plausible scenarios grounded successful empirical data.

Did you know? Three Arrows Capital and BlockFi suffered monolithic losses successful 2022 aft GBTC flipped from a premium to a steep discount, dropping implicit 40% beneath its nett plus value. Without a redemption option, these firms were trapped successful a losing presumption contempt Bitcoin’s existent marketplace worth being higher. This miscalculation contributed to their eventual collapse.

Lessons for Bitcoin treasury absorption from the 2008 fiscal situation

The warnings astir superior erosion for Bitcoin treasury companies are strikingly akin to the concern starring up to the 2008 planetary fiscal crisis. 

During the crisis, galore fiscal institutions relied connected precocious leverage to substance accelerated growth. For example, Lehman Brothers and Bear Stearns utilized excessive leverage to instrumentality connected risky subprime mortgages and fiscal products. When plus prices began to fall, these companies recovered themselves incapable to conscionable their obligations, starring to wide insolvencies. 

Lehman Brothers, successful particular, filed for bankruptcy successful September 2008, portion Bear Stearns was forced to merchantability itself to JPMorgan Chase aft a liquidity crisis. The leverage exemplary worked lone arsenic agelong arsenic plus prices kept rising. When they didn’t, the strategy collapsed.

Similarly, Bitcoin treasury firms that trust connected issuing much banal oregon borrowing wealth to get Bitcoin are exposed to the aforesaid risks. If Bitcoin’s terms falls sharply, these companies mightiness find themselves overextended, incapable to rise funds oregon screen liabilities, conscionable arsenic banks were during the 2008 crisis. Companies similar AIG besides relied connected risky fiscal products, specified arsenic recognition default swaps, and faced monolithic losses erstwhile the marketplace crashed, yet requiring a authorities bailout.

The cautionary acquisition present is not conscionable astir leverage but besides the risks associated with excessive optimism. When investors go overly assured successful an asset’s maturation potential, they whitethorn place the risks of abrupt marketplace shifts. This benignant of optimism tin pb to important fiscal instability if the marketplace moves against expectations. 

Therefore, it’s indispensable to see the following:

• Prepare for volatility: Bitcoin’s worth tin fluctuate wildly. Be prepared for crisp declines, particularly during marketplace corrections oregon planetary fiscal shifts.
• Understand the risks: While Bitcoin has large potential, it is inactive a highly volatile asset. Don’t overexpose your portfolio to a azygous investment.
• Diversification is crucial: Avoid putting each your resources into Bitcoin. Diversify your concern portfolio to dispersed hazard crossed assorted assets.
• Don’t trust connected short-term gains: If you’re investing successful Bitcoin for semipermanent growth, don’t panic implicit short-term terms fluctuations; however, beryllium alert that abrupt drops tin pb to important losses.
• Risk management: Have a hazard absorption strategy successful place, including mounting stop-loss orders oregon defining wide introduction and exit points for your investments.

Did you know? A recognition default swap (CDS) is simply a fiscal declaration that provides security against the default of a borrower. It became wide known during the 2008 situation erstwhile institutions similar AIG faced monolithic losses owed to their vulnerability to risky mortgage-backed securities.

Strategies to forestall superior erosion successful Bitcoin treasury companies

VanEck’s Sigel emphasizes the request for Bitcoin treasury companies to enactment preemptively to debar superior erosion. 

Some of his cardinal recommendations include:

• Pause banal issuance: If the company’s banal terms falls beneath 95% of its NAV for 10 consecutive days, it should halt issuing caller shares. This would forestall further dilution of shareholder worth erstwhile the marketplace is not pricing the institution optimistically.
• Consider stock buybacks: If the banal terms underperforms comparative to Bitcoin’s value, companies mightiness see buying backmost shares to trim the NAV discount and ore the ownership among less shareholders.
• Reevaluate the strategy: If a company’s banal consistently trades beneath NAV, it whitethorn request to rethink its Bitcoin strategy. Options see mergers, spinoffs oregon adjacent abandoning the Bitcoin-focused exemplary to unlock shareholder value.
• Align enforcement incentives: Companies should guarantee that enforcement compensation is tied to the per-share worth of the banal alternatively than the full magnitude of Bitcoin holdings. This discourages excessive accumulation of Bitcoin for the involvement of size and encourages executives to absorption connected sustainable worth creation.

Thus, Bitcoin whitethorn connection firm treasuries innovation, upside and headlines, but without disciplined strategy, it tin besides pb to irreversible superior damage. VanEck’s warnings are not speculative; they are rooted successful hard-earned lessons from some accepted concern and crypto history. 

In the end, it’s not who holds the astir Bitcoin — it’s who survives the adjacent downturn with their fundamentals intact.