Bitcoin Treasury Crisis: VanEck Warns of Capital Destruction

In 2025, as Bitcoin continues to gain traction, companies stacking it in their treasuries are stirring up both excitement and concern. VanEck, a global asset management firm known for its crypto expertise, recently sounded the alarm about the risks these firms face. According to their analysis, Bitcoin-heavy companies could be skating on thin ice, potentially eroding their capital while accelerating the decline of fiat currencies. Let’s break it down.

Want to trade crypto while reading our latest news? Head over to Bitrue and explore your options today!

Why Bitcoin Treasuries Are Booming

More companies are betting big on Bitcoin, treating it as a reserve asset to hedge against inflation and fiat instability. Public companies now hold 833,214 BTC (worth over $89.21 billion), while private firms own 421,641 BTC (valued at $45.14 billion), according to data.

Leading the charge are firms like MicroStrategy (592,345 BTC, $63.42B), Marathon Digital, Riot Platforms, CleanSpark, and Japan’s Metaplanet among public companies, and Block (140,000 BTC, $14.99B), Tether, and Xapo Bank among private ones.

Why Companies Are Stockpiling Bitcoin

These firms aren’t just parking cash in Bitcoin, they’re actively converting fiat into BTC, often by raising capital through stock issuance or debt. For example, MicroStrategy’s Michael Saylor has famously used this playbook, issuing shares and bonds when the company’s stock price was high to fund Bitcoin purchases. 

This strategy works when stock prices trade at a premium to the company’s net asset value (NAV), creating value for shareholders. But what happens when the music stops?

Read Also: Tether's New Bitcoin Treasury: Why This Could Push BTC Higher

The Risk of Capital Erosion

VanEck’s head of digital assets research, Matthew Sigel, warns of “capital erosion”, a scenario where a company’s value (or shareholders’ equity) shrinks despite holding Bitcoin. 

This happens when firms rely on issuing new shares or debt to buy Bitcoin, but their stock price no longer supports the strategy. If the stock price falls to or below the NAV, new share issuances dilute existing shareholders without adding value, effectively eating away at the company’s capital.

When High Stock Prices Turn Sour

Sigel points out that the success of this model hinges on elevated stock prices. For instance, MicroStrategy’s stock soared 153.46% year-over-year and 28.87% in 2025, while Metaplanet’s shares skyrocketed 1,346.60% year-over-year and 316.78% in 2025.

These gains reflect investor enthusiasm for Bitcoin-heavy balance sheets. But if Bitcoin’s price stagnates or drops, or if market sentiment shifts, these companies could struggle to raise capital without diluting shareholder value, leading to a downward spiral.

A Fragile Financial Model

The risk is clear: over-reliance on Bitcoin purchases funded by equity or debt can backfire. If a company’s stock price tanks, it may need to issue more shares at lower prices, reducing the value of existing shares. 

This could trap firms in a cycle of diminishing returns, where their Bitcoin holdings fail to offset the damage to their equity base.

Read Also: What is the Bitcoin-Linked Treasury Bond? Understanding VanEck's Plan to Solve the US

The Fiat Destruction Threat

Crypto strategist Adam Livingston argues that Bitcoin treasury firms are doing more than just diversifying, they’re waging a “speculative attack” on fiat currencies. By raising capital in dollars (or other fiat) and converting it into Bitcoin, companies like MicroStrategy and Metaplanet are pulling liquidity out of traditional financial systems. 

“They raise money in fiat, buy BTC, and repeat, it’s like draining the fiat system,” Livingston explains.

The Bitcoin Demand Spiral

Livingston describes this as a “Bitcoin demand spiral”:

• Companies issue shares or debt.

• They use the proceeds to buy Bitcoin.

• Bitcoin’s price rises, boosting the company’s stock price.

• Higher stock prices attract more investors, who fuel further Bitcoin purchases.

• The cycle repeats, accelerating the shift from fiat to Bitcoin.

This spiral could have massive implications. As more firms adopt this strategy, they’re effectively exiting fiat while still operating within it, creating a “monetary leak” that undermines traditional currencies.

What This Means for the Future

The surge in stock prices for Bitcoin-heavy firms suggests a new way of valuing companies. Investors are starting to prioritize BTC per share over traditional metrics like earnings or revenue.

If this trend continues, Bitcoin could become a global pricing benchmark, challenging the dominance of fiat currencies like the U.S. dollar.

The Threat to Fiat Dominance

Livingston warns that if more companies jump on the Bitcoin treasury bandwagon, fiat currencies could lose their grip. As firms convert dollars into Bitcoin, they reduce the liquidity and relevance of fiat in the global economy.

This could lead to a future where Bitcoin plays a central role in corporate finance and asset valuation, potentially destabilizing traditional monetary systems.

Read Also: MetaPlanet Goes All In on Bitcoin—Here’s Why It Matters

How Companies Can Mitigate Risks

To avoid capital erosion, companies need to tread carefully. Diversifying their treasury strategies, beyond just Bitcoin, can reduce reliance on volatile crypto markets. 

Firms should also monitor their stock price relative to NAV and avoid over-leveraging through debt or excessive share issuance.

Smarter Capital Allocation

Instead of chasing Bitcoin at any cost, companies could adopt a phased approach, buying BTC during price dips and maintaining cash reserves for operational needs. This balances the upside of Bitcoin’s potential with the need to protect shareholder value.

Conclusion

Bitcoin treasury firms innovate but risk capital erosion from aggressive financing, warns VanEck. Their shift to Bitcoin may hasten fiat's decline, with companies like MicroStrategy leading a "demand spiral." They must balance Bitcoin's potential with stability, as the world watches for success or failure.

FAQ

How does capital erosion happen to Bitcoin treasury firms?

It kicks in when a company issues shares or debt to buy BTC, but the stock price drops below NAV. That dilutes shareholders and shrinks equity, Bitcoin gains can’t cover the damage.

What’s the “Bitcoin demand spiral” VanEck warned about?

It’s a feedback loop: firms raise fiat - buy BTC - stock rises - attract more investors - repeat. It drains fiat liquidity and pumps Bitcoin demand dangerously fast.

Can companies protect themselves from Bitcoin-driven risk?

Yes, by not going all-in. They should buy BTC in phases, keep cash reserves, and avoid flooding the market with shares or debt. Balance is key to avoid a collapse.

Bitrue Official Website: 

Website: https://www.bitrue.com/

Sign Up: https://www.bitrue.com/user/register

Disclaimer: The views expressed belong exclusively to the author and do not reflect the views of this platform. This platform and its affiliates disclaim any responsibility for the accuracy or suitability of the information provided. It is for informational purposes only and not intended as financial or investment advice.