Franklin Templeton Warns: Corporate Crypto Treasuries May Amplify Market Crashes

Brace for impact—your company's Bitcoin stash could backfire spectacularly.

Corporate treasuries diving into crypto might seem like a hedge, but Franklin Templeton's latest analysis suggests these positions could become crash accelerants. When panic hits, those 'strategic reserves' turn into fire sales—wiping out retail holders first.

Volatility on steroids

Imagine Apple or Tesla dumping even 5% of their BTC holdings during a downturn. The domino effect would make 2022's crypto winter look like a mild frost.

Finance never learns, does it? After subprime mortgages and junk bonds, now we've got publicly traded companies playing with digital dynamite. What could possibly go wrong?

135 Listed Firms Have Adopted Bitcoin as a Reserve Asset

Data from Bitcoin Treasuries shows 135 listed firms have deployed this playbook in BTC alone, with leaders including Strategy, Metaplanet, Twenty One, SharpLink, Upexi, and Sol Strategies.

Inspired by Michael Saylor’s Strategy, firms have raised billions since early 2024 by issuing shares at premiums to net asset value (NAV) and capitalizing on crypto volatility.

Franklin Templeton analysts highlighted how the upsides of this approach include the ability to raise capital above NAV, making share issuance accretive even amid price swings.

Additionally, for Proof-of-Stake assets like ethereum and Solana, staking yields can add revenue streams, enhancing company growth when crypto prices rise.

Rising markets can further attract investors, fueling a positive feedback loop.

The Strategy Treasury Playbook pic.twitter.com/YXXdZmtlIm

However, the report flagged a significant downside: if the market-to-NAV ratio slips below 1, equity issuance becomes dilutive, undermining investor confidence and stalling capital inflows.

Worse, if crypto prices fall sharply, companies might feel pressured to sell holdings to support their stock price, sending crypto prices even lower and deepening investor fear.

Such a negative feedback loop could turn a price dip into a self-reinforcing crash.

“The corporate crypto treasury model represents a new phase of institutional crypto adoption, but it is not without its risks,” Franklin Templeton wrote.

Maintaining a premium to NAV and managing market volatility will be essential to avoid dangerous spirals.

More Analysts Voice Concern Over Bitcoin Treasuries

The warning echoes recent comments from Matthew Sigel, head of digital asset research at VanEck, who has voiced concerns over the bitcoin treasury strategies adopted by some publicly traded firms.

Sigel singled out the use of at-the-market (ATM) share issuance programs, arguing that these can become dilutive if a company’s stock price nears its Bitcoin net asset value (NAV).

To protect investors, he suggested suspending ATM programs if shares trade below 0.95 times NAV for more than 10 consecutive days.

Meanwhile, New York law firm Pomerantz LLP has filed a class action lawsuit against Michael Saylor’s Strategy, accusing the Bitcoin-focused firm of misleading investors about the profitability and risks of its crypto investment strategy.

According to Pomerantz, Strategy overstated the benefits of its Bitcoin treasury strategy and downplayed the volatility and risks inherent to large-scale Bitcoin holdings.