Listed companies worldwide are dedicating themselves to BTC this year. Companies are accelerating their acquisition of BTC through stock or bond issuance and adding it to their financial statements. As the value of Bitcoin continues to rise, companies are benefiting from stock price increases and valuation gains.
However, the upcoming question is: What will happen if a bear market returns? Will institutional confidence be maintained, or will it waver in the face of volatility? BeInCrypto investigated the possibilities in a potential bear market with industry experts, discussing whether these companies will provide more stability or cause a downturn.
Institutional Bitcoin Interest: A Double-Edged Sword?
Over the past few months, BeInCrypto has extensively reported on corporate Bitcoin acquisitions. This trend, started by Michael Saylor, co-founder of (Micro) Strategy, has inspired many.
Dean Chen, an analyst at Bitunix, emphasized that the increase in institutional capital has strengthened Bitcoin's position as a 'digital gold'.
"In the first seven months of 2025, net inflows into institutional Bitcoin ETFs exceeded $5 billion, and BlackRock's iShares Bitcoin Trust reached over $85 billion in AUM, contributing to BTC's 26% rise year-to-date," Chen told BeInCrypto.
Additionally, John Glover, CIO of Ledn, explained that Bitcoin's reputation for stability in recent years is due to increasing institutional participation. Glover said that as Bitcoin's volatility decreases over time, it is increasingly behaving like a traditional asset.
Nevertheless, like all traditional assets, markets experience cycles, and bull markets typically lead to bear markets. He anticipates that Bitcoin's future bear market will be less severe compared to past cycles but predicts that a correction is inevitable.
Specifically, he added that while institutions bring capital, they also bring constraints.
"Fund managers, listed companies, pension board directors – they are not driven by ideology. They are accountable to shareholders. They watch quarterly performance. And when pressure builds, they sell," Glover said.
Chen pointed out that institutional investors tend to exit the market faster than retail investors. Therefore, if the market moves in the opposite direction, high-frequency trading funds and quant strategies are likely to sell their positions.
However, Marcin Kazmierczak, COO and co-founder of Redstone, offered an alternative perspective. He mentioned that while institutional investors might struggle in a bear market, their participation has brought advanced risk management practices to the crypto space.
"Companies with Bitcoin financials generally have longer investment lifespans compared to retail traders, potentially providing stability even during downturns. The key is that institutional adoption can diversify the holder base, potentially reducing volatility compared to previous cycles," he told BeInCrypto.
Bitcoin Acquisition Corporate Financial Model Success
Institutional investors use various financial methods to purchase Bitcoin, with debt being the most common. In a post on X, Redbox Global revealed that Bitcoin-centric companies face a debt maturity wall of $12.8 billion by 2028.
"Marathon Digital and Strategy (led by Michael Saylor) face a debt maturity wall of $12.8 billion by 2028, threatening their survival. These companies hold over 725,000 BTC but heavily rely on debt and stock sales to fund purchases, losing millions quarterly. Convertible bonds currently help, but stock price drops could force Bitcoin liquidation or dilutive refinancing," the post read.
These concerns are not new. Previously, Signum Bank and other market analysts have also raised warnings about the strategy's sustainability.
Chen emphasized that Strategy has raised $4.287 billion since 2020 through zero-coupon convertible bonds and stock issuance, purchasing over 600,000 BTC at an average of $71,268. This strategy promotes Bitcoin accumulation during bull markets. However, in bear markets, interest payments and stock price drops create financial pressure.
Furthermore, Strategy's debt represents about 24.3% of its capital structure. He added that if Bitcoin falls below a certain threshold, convertible bonds could trigger forced conversion or redemption. Other companies like Marathon Digital issue stocks before bonds to lower leverage. Nevertheless, they have higher capital costs and limited resilience.
"Research shows that when hedge funds or corporations exceed a debt-to-equity ratio of 30% and asset prices drop by 20%, default probability increases by over 40%. Therefore, companies heavily dependent on debt financing are more exposed to credit risk and forced liquidation during bear markets," Chen said.
Nevertheless, Glover emphasized that companies with strong capital structures, such as maturity diversification and low-interest debt, will perform better. He said Strategy's model can withstand significant losses. However, newer companies face higher risks of forced sales during downturns.
"Tesla's $97 million impairment shows what can happen when Bitcoin is just left idle. In states of excessive leverage and lack of preparation, bear markets can turn financial assets into liabilities," he added.
Anthony Georgiadis, founder and general partner of Innovating Capital, also referred to this strategy as a 'high-risk strategy'.
"When BTC experiences a significant decline, companies using high leverage may face difficulties in refinancing or meeting debt obligations. If a company heavily relies on debt, it can become vulnerable during a long-term downturn." – As mentioned to BeInCrypto.
Meanwhile, Kazmierczak noted that companies using convertible bond strategies have demonstrated an innovative way to balance growth and risk management. He stated that their effectiveness ultimately depends on the strength of their core business and the ability to repay debt through operating cash flow, rather than solely relying on Bitcoin value appreciation.
He believes that a smart financial strategy is properly adjusting positions proportionate to the entire balance sheet. Kazmierczak explained that listed companies holding significant Bitcoin have demonstrated sound management by treating BTC allocation as part of their total reserves.
"Mass selling is unlikely as it would confirm losses and go against their long-term strategy. Companies like MicroStrategy have weathered previous downturns without selling, suggesting confidence in their approach. The transparency of listed companies means the market can anticipate potential pressures in advance and reflect them in pricing," he affirmed.
What happens to the price when institutions sell Bitcoin?
While experts show cautious optimism about financial strategies, centralization is of greater concern. According to the latest Bitcoin Treasury data, the top 3 listed Bitcoin treasury companies hold approximately 695,000 BTC, representing 3.31% of the total BTC supply. What if one or more companies decide to sell?
"When a company holds nearly 3% of the total BTC supply, as Strategy currently does, that concentration becomes a market risk. If they need to sell due to financial pressure, repayment, or stock collapse, it could trigger a chain reaction. Other companies might follow, liquidity could dry up, and prices could fall faster than their fundamental value." – Glover explained to BeInCrypto.
He noted that hedging options are possible in this space, and market liquidity continues to increase with instruments like futures and options. Therefore, Glover hopes BTC treasury companies can strategically manage risks to withstand bearish markets.
Nevertheless, Bitcoin is not the only asset affected. The decline of the largest cryptocurrency could lead to broader market downturn.
Ledn's CIO emphasized that 'Bitcoin is still the anchor of the entire market.' He mentioned that if large holders start selling, it sends a message that no cryptocurrency is 'safe'.
"Historical data shows that when BTC-driven capital exits the market, altcoins and meme coins tend to experience 2-3 times the decline. If treasury companies initiate large-scale BTC sales, rapid breakdown of major support levels could trigger panic among retail investors, accelerate capital outflow, and potentially extend the cryptocurrency market's downturn for months or more." – Chen added.
Factors Affecting Corporate Bitcoin Holding Capacity
The Bitcoin and cryptocurrency sector is not immune to macroeconomic pressures. Markets quickly reacted and plummeted with events like Trump's tariffs or the Israel-Iran conflict.
Experts also explained the key factors that would most significantly impact BTC treasury companies' ability to hold Bitcoin during bearish markets.
"As interest rates rise and liquidity tightens, companies relying on debt to hold Bitcoin could face pressure. If they cannot refinance at reasonable costs, the situation could quickly deteriorate. Inflation adds another layer of uncertainty. Some see it as a reason to buy and hold Bitcoin, while others view it as a retreat signal. It depends on how market sentiment shifts. Successful companies won't simply be those holding the most BTC, but those who have built robust risk management in their operations." – Glover shared with BeInCrypto.
Moreover, Chen from Bitunix noted that regulatory factors could play a crucial role. According to him, the Clarity Act could reduce institutional compliance costs, thus potentially supporting long-term Bitcoin holdings for treasury companies.
Additionally, shareholder pressure is another important factor to consider. Chen explained that if Bitcoin crashes, shareholders might take coordinated actions like convening special meetings, forcing the board to adopt more conservative strategies and liquidate assets to reduce risk.
"If a company's stock drops over 50% due to BTC price collapse, investors can use proxy voting or public pressure to demand asset liquidation to protect capital. For instance, MicroStrategy's primary short-seller, Gus Gala, once publicly urged the company to sell BTC, mentioning 'shareholder pain from an 8% preferred dividend'. Furthermore, if the company's stock falls below the convertible bond exercise price, bondholders can legally demand early redemption, which could intensify BTC selling pressure." – He conveyed.
Nevertheless, Glover emphasizes that a potential bearish market will not make Bitcoin disappear. However, it will be a crucial opportunity to test institutional confidence in the asset.
