VC warns "Bitcoin Reserve Company": Unable to avoid death spiral, collapse will bring Bear Market

Breed VC warns that Bitcoin treasury companies lacking financial discipline may slide from mNAV to forced selling, ultimately leading to mergers or bankruptcy. (Background: Did MicroStrategy's Bitcoin purchases cause trouble? 5 class action lawsuits accuse the strategy of including 'false statements') (Background Supplement: Understanding the nature of MicroStrategy's 'crazy Bitcoin buying': it's an arbitrage business) Large corporations, ETFs, and family offices are moving Bitcoin (BTC) onto their balance sheets, but a study released by Breed VC on the 28th pointed out that this wave of 'treasury companies' hides the risk of a death spiral, and only robust cash flow and strict financial discipline can ensure survival. Death spiral behind the treasury company craze: Over 250 institutions globally hold Bitcoin, with dozens more expected to join from 2024 to 2025. Breed VC breaks down the potential failure process into seven steps: Bitcoin price drop, mNAV (market capitalization/net assets) decline, stock price approaching NAV, financing channels narrowing, leverage breaking or margin calls, forced selling of BTC, ultimately leading to mergers or bankruptcy. The report mentions that the higher the mNAV premium, the longer the spiral's activation can be delayed. Financing methods determine survival: Most companies rely on issuing new shares to buy coins, which dilutes equity, but as long as mNAV remains at a premium, this type of equity financing is cheap and has no maturity pressure. In contrast, companies using convertible bonds or other debt instruments face interest, maturity, and margin call risks. Once the mNAV premium disappears, the market will demand higher interest rates, debt costs will soar, and the death spiral will be ignited quickly. Breed VC warns: 'When mNAV falls below 1, the fundraising window almost instantly closes, and any leverage becomes a ticking time bomb.' MicroStrategy's live example: Now renamed Strategy, MicroStrategy holds approximately 580,000 BTC, with liabilities close to $30 billion, and convertible bonds maturing in 2027. The company continues to increase Bitcoin-per-share and maintains mNAV premium through frequent communication from CEO Michael Saylor; at the same time, it retains a cash buffer and extends maturity with low-cost borrowing. Breed VC summarizes five major survival conditions: deleverage, strengthen governance, focus on long-term vision, actively communicate with investors, and prepare for mergers and exits when necessary. Investor checklist: If the industry overly relies on debt financing, the death spiral may become the trigger for the next crypto bear market. Currently, the equity-dominated structure has not yet spilled over the risks, but investors should still check three things: the company's mNAV level, debt structure, and the ratio of coins held per share. The friendly regulation and standardized accounting principles of the Trump administration in 2025 may provide short-term buffers, but cannot offset the structural weaknesses caused by excessive leverage. In conclusion, whether one can 'win with less' in severe fluctuations does not depend on Bitcoin's price but on financial discipline and operational resilience. Investors who understand mNAV and leverage data can delineate the true risk boundaries. Related reports: MicroStrategy responds to 'Bitcoin quantum attack', Michael Saylor: Doomsday fears, if true, Google and Microsoft would be the first to fall. MicroStrategy's Michael Saylor: Apple should invest in BTC, which could boost its stock price more than repurchasing Apple shares. MicroStrategy adds more Bitcoin 'issues $250 million in preferred shares', Michael Saylor: buy BTC is an explosive trend. This article was first published in BlockTempo, the most influential blockchain news media.