VanEck Warns: Bitcoin Treasury Firms at Risk of Rapid Capital Erosion and Fiat Destruction

As Bitcoin continues its evolution from speculative asset to institutional reserve, a stark warning from asset manager VanEck has brought a critical perspective into focus. 

Companies adopting Bitcoin as a primary treasury asset may be exposing themselves to a unique set of financial risks — from rapid capital erosion to a destructive impact on fiat value. 

This growing trend among firms looking to “Bitcoinize” their balance sheets could be far more fragile than it appears on the surface.

VanEck’s analysis reveals deep structural vulnerabilities that Bitcoin treasury companies face — particularly during periods of market correction or when investor sentiment turns. T

hese risks are not merely theoretical. They mirror patterns seen during past financial crises and are amplified by Bitcoin’s inherent volatility, reliance on speculative capital, and systemic market behaviors.

Bitcoin Volatility and Capital Erosion: Why Treasury Firms Are Vulnerable

Bitcoin’s extreme volatility makes it fundamentally unsuitable as a stable treasury reserve. Unlike traditional assets such as bonds or cash equivalents, Bitcoin can fluctuate sharply within short periods, creating a mismatch between reserve asset behavior and corporate liquidity needs.

Moreover, many treasury-focused firms raise capital through equity dilution or debt issuance to acquire more Bitcoin. 

This practice only works when the company trades at a premium to its net asset value (NAV). If the stock price falls below NAV, continued issuance harms existing shareholders and begins to erode capital — even as the firm holds more BTC.

Read more: After Iran-Israel Ceasefire Announcement

Discount to NAV and the Market’s Reality Check

Examples like Semler Scientific underscore a worrying trend: when a company’s Bitcoin holdings exceed its market capitalization, investors are signaling mistrust in the business model. 

The persistent discount to NAV creates a double-edged sword — limiting the ability to raise further capital and pressuring the firm to sell Bitcoin holdings during unfavorable market conditions.

This reflects not just valuation misalignment but also liquidity risk, especially if firms are forced to liquidate assets at depressed prices. It introduces a dangerous feedback loop where asset sell-offs further suppress prices, worsening financial conditions.

Behavioral and Structural Risk Patterns Echo Financial Crises

VanEck draws parallels to the 2008 financial crisis, where excessive leverage, overconfidence, and lack of stress-testing contributed to systemic collapse. 

Bitcoin treasury firms may be unknowingly repeating these patterns. Many rely on unhedged positions, exhibit herd behavior, and assume infinite BTC upside — all while ignoring the “fat tail” nature of crypto markets where extreme price crashes are statistically probable.

Risks also stem from DeFi exposure, smart contract vulnerabilities, and custodial failures, which can trigger wider financial instability for companies with deep crypto exposure. 

A combination of over-leverage and declining prices could initiate what some analysts, such as Breed Capital, term a “death spiral”: falling Bitcoin value, restricted capital access, forced liquidation, and further value erosion.

Read more: India Considers Bitcoin Reserve Pilot as Global Crypto Adoption Grows

Recommendations for Risk Mitigation

VanEck proposes several strategic actions for treasury firms to avoid collapse:

• Pause share issuance if market price falls below 95% of NAV for sustained periods to protect shareholder equity.
  
   
• Conduct buybacks when possible to close the NAV gap and consolidate value.
  
   
• Reassess Bitcoin as a core treasury asset if consistent undervaluation occurs.
  
   
• Link executive incentives to per-share value performance, not Bitcoin accumulation, to ensure strategic discipline.
  
   
• Develop stress-tested models that simulate black swan events, extreme volatility, and systemic failures — a necessity in the crypto economy.
  
   

These recommendations aim to restore balance between Bitcoin enthusiasm and financial prudence, ensuring that treasury strategies are resilient, not reactive.

Conclusion

The trend of public firms adopting Bitcoin as a core reserve asset has sparked interest across the financial world. But VanEck’s warning is a reminder that without disciplined risk frameworks, these firms could rapidly erode capital, damage shareholder value, and expose themselves to systemic failures eerily similar to those seen in traditional finance.

The path forward requires a blend of crypto innovation and traditional financial safeguards. Bitcoin may be digital gold, but treating it like cash or stable reserves without accounting for its behavior could lead treasury-focused firms into dangerous territory — and possibly a structural unwinding of their entire model.

Read more: 

Why Owning Bitcoin (BTC) Will Be the New American Dream

BTC to USD Today: Bitcoin Price Conditions After Iran-Israel Ceasefire Announcement

Michael Saylor’s Bold Bitcoin Strategy

Metaplanet Raises $517M to Buy More Bitcoin in Big Investment Plan

FAQ 

Why are Bitcoin treasury companies at risk?

These firms face risks due to Bitcoin’s volatility, capital-raising strategies that rely on stock premiums, and systemic market vulnerabilities that can erode capital during downturns.

What is net asset value (NAV) and why does it matter?

NAV represents the per-share value of a company’s assets. If a firm’s stock trades below NAV, issuing new shares becomes harmful to shareholders and weakens capital structure.

What is the “death spiral” risk VanEck refers to?

It’s a scenario where falling Bitcoin prices reduce NAV, cut off access to capital, trigger liquidations, and further suppress prices — potentially causing company collapse.

How can Bitcoin treasury firms manage risk?

Strategies include halting equity issuance below NAV, buying back shares, reassessing Bitcoin-focused models, and creating volatility-resistant risk frameworks.

Is holding Bitcoin in corporate treasuries still a good idea?

It can be viable with proper risk management, diversified treasury strategies, and long-term alignment with investor expectations. Blind accumulation without safeguards is risky.