As institutional adoption of Bitcoin accelerates, U.S. asset management giant Franklin Templeton has issued a cautionary note on the growing trend of crypto-based treasury strategies.
In a recent report cited by The Block, the firm’s analysts highlighted both the momentum and potential dangers of public companies adopting Bitcoin and other digital assets as part of their corporate balance sheets.
The model—popularized by Michael Saylor’s firm Strategy—has inspired a wave of public firms to follow suit. In addition to Strategy, companies like Metaplanet and Twenty One have adopted BTC-focused treasury allocations. Others, including SharpLink, Upexi, and Sol Strategies, are pursuing similar approaches using Solana (SOL) or Ethereum (ETH).
According to Franklin Templeton’s analysts, the future of institutional crypto treasuries remains uncertain and hinges on a number of financial dynamics—particularly the market-to-NAV (net asset value) ratio. If this ratio dips below 1, new stock issuances could become dilutive, making it difficult for companies to raise capital without negatively affecting existing shareholders.
The report warns that in such cases, capital formation may stall, putting pressure on firms to unwind their crypto positions. “If cryptocurrency prices fall, companies may be forced to sell assets to protect stock valuations, leading to further price declines,” the analysts wrote.
This risk could create a negative feedback loop, with declining crypto prices prompting asset liquidations that further damage both market prices and investor confidence.
While Franklin Templeton acknowledges that institutional adoption of Bitcoin and crypto treasury models will likely expand, the firm stresses that such strategies may increase volatility for both equity investors and crypto markets. In a prolonged bear market or steep price correction, these companies could become high-risk plays with amplified downside exposure.
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