Franklin Templeton analysts warn of risks associated with the rise of corporate crypto treasuries, highlighting the threat of a negative feedback loop if the crypto market experiences a sustained downturn.
The analysts caution that the trend of companies adding digital assets to their balance sheets poses systemic risks due to potential forced liquidation in case of market downturns, leading to a cascading cycle of fear and losses.
This strategy, popularized by early adopters like MicroStrategy, involves raising capital to buy and hold digital assets like Bitcoin, Ethereum, Ripple, and Solana; risking negative impacts on shareholder value and corporate growth during market volatility.
Companies like Metaplanet have joined the corporate Bitcoin accumulation trend, aspiring to hold large amounts of BTC, but the practice raises concerns about potential disruption in case of market downside.