Bitcoin Treasuries Are Ticking Time Bombs as Leverage Hits Record Rates, Warns Capriole’s Charles Edwards

A Yr-Previous Warning Resurfaces

Bitcoin treasury firms are taking up debt at report charges to fund their bitcoin purchases, Capriole Investments founder Charles Edwards warned. He tied the pattern again to a name he made in October 2025, arguing that the digital asset treasury (DAT) mannequin is structurally incentivized to depend on borrowing to fabricate returns, additional including:

“ Bitcoin DATs are levering up at report charges. Again in Oct 2025 I warned precisely this could occur as this unsustainable enterprise mannequin is incentivised to depend on debt to generate faux ‘yield’.”

His core objection is to how the technique generates its headline returns. A digital asset treasury, or DAT, is a public firm that raises capital (usually via debt or share gross sales) to build up bitcoin on its steadiness sheet. The mannequin, pioneered by Technique Inc. (Nasdaq: MSTR), can amplify features when bitcoin rises, however it additionally provides leverage in order that when costs fall, companies that borrowed to purchase can face strain to boost money, service debt, or promote.

The 1929 Comparability and “Pretend Yield” Narrative

Earlier this yr, Edwards in contrast the speedy buildout of DATs to the leveraged funding trusts of 1929, calling them a “ leverage explosion ready to occur.” He pointed to the roughly 200 bitcoin treasuries now in existence and argued that the extra they lever up, the extra a drawdown can cascade via compelled deleveraging, with every vendor pushing the worth decrease for the subsequent.

Furthermore, his “faux yield” cost cuts at how treasury companies market themselves, on condition that many tout a bitcoin-per-share progress metric as a type of yield. Edwards contends the determine is essentially a product of issuing new debt and shares relatively than real revenue. In easier phrases, it may be considered as a flywheel that works solely whereas capital markets keep open and costs keep excessive.

With so many public firms and exchange-traded funds (ETFs) now holding bitcoin, a synchronized unwind, in his view, may flip an odd correction into one thing sharper.

The Pressure Is Already Displaying

The warning arrives because the treasury mannequin faces actual stress, with Bitcoin.com Information reporting earlier this month that bitcoin treasury firms are dealing with a borrow-or-sell check, with the query shifting from accumulation to liquidity (i.e. how companies fund dividends, debt prices, and different commitments with out slicing BTC publicity).

That strain has reached the highest of the market as Cryptoquant knowledge confirmed treasury shopping for exterior Technique has collapsed with non-Technique companies shopping for a mixed 1,000 BTC over 30 days, a 99% drop from an August 2025 peak. Consequently, Technique now holds roughly 76% of all company bitcoin.

Others are leaning more durable into leverage. Japan’s Metaplanet, as an example, executed about 20 rounds of debt-for- BTC financing in roughly two years, together with zero-coupon bonds, because it chases a 100,000 BTC goal. Bitcoin.com Information reported the corporate posted a $725 million quarterly loss whilst its stack reached 40,177 BTC.

Why It Issues Now

Bitcoin just lately posted its worst week for the reason that 2022 FTX collapse, sliding beneath $60,000 as report exchange-traded fund (ETF) outflows hit the market. In a downturn, the monetary engineering that powered the treasury increase on the best way up can work in reverse, pressuring essentially the most indebted companies first.

Trying forward, if BTC recovers, the leverage that worries Edwards may as soon as once more seem like savvy monetary engineering. If the downturn drags on, essentially the most leveraged treasuries would be the first to really feel it.