Key Points
- Bitcoin treasury firms hold around $12.7 billion in debt, with Strategy accounting for $8.2 billion.
- Galaxy Digital’s Alex Thorn believes concerns about the debt triggering a bear market are “overblown”.
Galaxy Digital has addressed concerns about the potential for debt held by Bitcoin treasury companies to trigger a bear market. Alex Thorn, Galaxy’s Head of Research, stated in a post on X (formerly Twitter) that he believes these concerns are exaggerated.
The Debt of BTC Treasury Firms
Most analysts have identified Strategy (formerly MicroStrategy), led by Michael Saylor, as a potential risk factor due to the significant debt it has taken on to acquire its holdings of 580.9K BTC. Strategy, along with other public companies like MARA, owns 3.65% of the total BTC supply, which could pose a market risk if they were to go bankrupt.
There are differing opinions on whether these firms could potentially mitigate the impact of a significant BTC downturn. Some analysts, like those at Bernstein, have predicted that these companies could drive more than $330 billion in inflows to the asset by 2029.
Concerns About the Impact of Debt
However, others are skeptical about the ability of new companies following Strategy’s model to survive a bear market. Max Keiser, a BTC advisor to El Salvador’s Nayib Bukele, expressed doubt that these new firms would show the same discipline as Saylor, who continued to buy BTC even when his position was underwater.
Standard Chartered’s Head of Digital Assets Research, Geoffrey Kendrick, also expressed concern, stating that while Bitcoin treasuries are currently adding to Bitcoin buying pressure, this could potentially reverse over time, leading to downside price pressure and volatility.
Despite acknowledging the debt held by Bitcoin treasury companies, particularly Strategy, Galaxy Digital’s report stated that most of Strategy’s debt matures between 2027 and 2030, and therefore should not pose a mid-term issue.
