In brief
On Thursday, Coinbase sent out a stark warning to publicly traded companies investing heavily in Bitcoin, with the crypto giant’s analyst suggesting that while current gains might appear exhilarating, any downturn could lead to a disaster for the broader crypto market.
In a report analyzing the crypto market’s potential outlook for the second half of 2025, Coinbase Head of Research David Duong highlighted that while the trend of corporate Bitcoin treasury investments is currently bullish, it introduces “systemic risks” over the medium-to-long term.
Ranging from established names like Tesla to GameStop and the Trump Organization, a number of prominent publicly traded companies have recently dived headfirst into acquiring substantial holdings of Bitcoin. With over 126 major corporations currently holding collectively nearly 820,000 BTC worth approximately $87 billion, this widespread investment has created a worrying domino effect scenario, as per Coinbase’s assessment.
David Duong explained that the incentive for these companies to invest became exceptionally strong following the December 2024 adjustments to accounting rules that permit unrealized crypto gains under U.S. Generally Accepted Accounting Principles (GAAP). The coincidence of this rule change with a Bitcoin bull run drew numerous companies to this potentially lucrative strategy.
The reported consequences now, according to Coinbase, are the widespread duplication of such investments. The concerns focus on the possibility that selling pressure from these corporate entities, triggered by the need to finance repurchases and meet obligations upon a price decline, could provoke a significant sell-off, even before the market actually declines.
“Thus, the fear is that indiscriminate selling by many entities at once (to service those debts) could lead to market liquidations and a sell-off in crypto more broadly,” Duong wrote, adding: “If prices start to fall and these entities perceive a narrowing exit, others may rush to sell as well, destabilizing the market well before any actual debt repayment issues emerge.”
Despite classifying these potential market dynamics and the resulting selling pressures as “systemic,” Duong expressed confidence in Bitcoin’s long-term trajectory. This contrasts with opinions voiced last week by Standard Chartered, which reported that if Bitcoin’s price falls below $90,000, roughly half of the non-crypto publicly traded firms holding Bitcoin might face losses on their investments.
This isn’t the first note of caution; Coinbase CEO Brian Armstrong himself acknowledged last month that the strategy adopted by some companies to deploy significant Bitcoin reserves would have been “too risky” for Coinbase “in its earlier days.” Armstrong’s position aligns with Duong’s, viewing Bitcoin block storage as currently problematic for cash reserves integrated within traditional corporate finance structures.
