The corporate treasury Bitcoin battle is heating up, but will it repeat the Grayscale GBTC implosion?

With Bitcoin's market cap soaring, 124 publicly listed companies have incorporated it into their financial strategies, and crypto treasuries are becoming a new institutional craze.

However, this trend has also triggered warnings within the industry. Castle Island partner Nic Carter and others caution that the current "buy-the-dip flywheel" may be heading down a similar risky path as Grayscale's GBTC.

Taking MicroStrategy as an example, its BTC holdings have a market cap of $61.0 billion, while the company's market cap is as high as $107.4 billion, a premium of 1.76x. Similar companies such as Twenty One, Nakamoto Corp, and Trump Media are also using huge amounts of financing to increase their holdings of Bitcoin, Ethereum, or SOL and other crypto assets.

The risk behind this strategy lies in: rising stock price → financing to increase BTC holdings → boosting confidence → further rise. Once the market reverses, this mechanism may trigger a systemic chain reaction.

If the price of coins plummets, treasury assets shrink → stock price falls → financing is hindered → forced selling of BTC, amplifying the decline.

This path is quite similar to the GBTC implosion in 2022. Back then, 3AC, BlockFi, and others used leverage to subscribe to GBTC and pledge loans. After the GBTC premium turned into a discount, they were liquidated, triggering a crypto trust crisis.

Standard Chartered recently warned that if BTC falls below the current average corporate cost of $22,000.00, half of the holdings will face floating losses and may be forced to sell. If the current market price falls below $90,000.00, the risk may be triggered.

Even if MicroStrategy has built a more flexible capital structure through convertible bonds and ATM share issuances, giving it resilience within the cycle, it remains to be seen whether the entire industry can maintain confidence in a bear market, and careful assessment is still needed.

Will the "crypto treasury craze" repeat the GBTC scenario? The market doesn't have much time left.