Franklin Templeton Raises Concerns Over Corporate Bitcoin Treasury Strategies

As institutional adoption of Bitcoin (BTC) accelerates, US investment giant Franklin Templeton has issued a cautionary note about the risks involved in cryptocurrency-based corporate treasury strategies. The asset manager highlighted growing uncertainty surrounding institutional BTC adoption, citing several critical factors that could impact its viability.

Analysts at Franklin Templeton noted: "Following Michael Saylor's pioneering Bitcoin strategy at MicroStrategy, corporate crypto treasuries are gaining momentum - extending beyond Bitcoin to include Ethereum, Solana, and XRP. Currently, 135 public companies hold only BTC, while others like Metaplanet and TwentyOne pursue BTC strategies, and entities such as SharpLink Gaming, Upexi, and Sol Strategies implement SOL-based approaches."

However, the firm warned of significant risks if the market-to-NAV ratio falls below 1. Analysts explained this scenario could make new stock issuances dilutive, potentially hampering capital raising efforts without negatively affecting existing shareholders. In more severe cases, declining crypto prices might force companies to liquidate holdings to cover losses and support stock prices - potentially triggering a downward spiral in cryptocurrency valuations.

"While institutional adoption of Bitcoin treasury strategies may continue growing," analysts cautioned, "these positions could become highly risky investments during prolonged bear markets or major price corrections. Any significant crypto price drop could prompt companies to liquidate assets to maintain stock valuations, potentially eroding crypto market values and investor confidence in a negative feedback loop."

This content does not constitute investment advice.