Charles Edwards, founder of Capriole Investments, warned that bitcoin treasury companies are taking on debt at record rates to fund bitcoin purchases, reviving a concern he first raised in October 2025. Edwards argued the digital asset treasury model is structurally incentivized to rely on borrowing to manufacture returns, stating that bitcoin DATs are 'levering up at record rates' and this 'unsustainable business model is incentivised to rely on debt to generate fake yield.' The warning comes as Strategy holds approximately 76% of corporate bitcoin holdings while buying activity among other treasury companies has collapsed.
Edwards Links Treasury Debt Growth to October 2025 Warning
Edwards tied the current debt trend to a warning he issued in October 2025, arguing that the digital asset treasury model structurally incentivizes reliance on borrowing. A digital asset treasury, or DAT, is a public company that raises capital through debt or share sales to accumulate bitcoin on its balance sheet. The model, pioneered by Strategy Inc. (Nasdaq: MSTR), can amplify gains when bitcoin rises, but also adds leverage that creates pressure to raise cash, service debt, or sell when prices fall. Edwards presented a chart showing crypto treasury companies' growing debt levels.
Edwards Compares Bitcoin Treasuries to 1929 Investment Trusts
Earlier this year, Edwards compared the rapid buildout of DATs to the leveraged investment trusts of 1929, calling them a 'leverage explosion waiting to happen.' He pointed to the roughly 200 bitcoin treasuries now in existence and argued that increased leverage could trigger cascading forced deleveraging during a drawdown, with each seller pushing prices lower. Edwards' 'fake yield' charge addresses how treasury firms market bitcoin-per-share growth metrics as a form of yield. He contends the figure is largely a product of issuing new debt and shares rather than genuine income, describing it as a flywheel that works only while capital markets stay open and prices remain high.
Treasury Companies Face Liquidity Pressure as Non-Strategy Buying Drops 99%
Bitcoin.com News reported earlier this month that bitcoin treasury companies are facing a borrow-or-sell test, with the question shifting from accumulation to how firms fund dividends, debt costs, and other commitments without cutting BTC exposure. Cryptoquant data showed treasury buying outside Strategy has collapsed, with non-Strategy firms buying a combined 1,000 BTC over 30 days, a 99% drop from an August 2025 peak. Strategy now holds roughly 76% of all corporate bitcoin. Japan's Metaplanet executed about 20 rounds of debt-for-BTC financing in roughly two years, including zero-coupon bonds, as it chases a 100,000 BTC target. Bitcoin.com News reported the company posted a $725 million quarterly loss even as its stack reached 40,177 BTC.
Bitcoin Price Drop Below $60,000 Intensifies Treasury Model Concerns
Bitcoin recently posted its worst week since the 2022 FTX collapse, sliding below $60,000 as record exchange-traded fund outflows hit the market. Edwards stated that in a downturn, the financial engineering that powered the treasury boom can work in reverse, pressuring the most indebted firms first. He noted that if BTC recovers, the leverage could once again look like savvy financial engineering, while if the downturn drags on, the most leveraged treasuries will be the first to feel it.
FAQ
What did Charles Edwards warn about bitcoin treasury companies?
Charles Edwards warned that bitcoin treasury companies are taking on debt at record rates to fund bitcoin purchases, calling the digital asset treasury model structurally incentivized to rely on borrowing to manufacture returns. He stated that bitcoin DATs are 'levering up at record rates' with an 'unsustainable business model incentivised to rely on debt to generate fake yield.'
How much corporate bitcoin does Strategy hold compared to other treasury companies?
Strategy holds approximately 76% of all corporate bitcoin holdings. Cryptoquant data showed non-Strategy firms bought only 1,000 BTC over 30 days, representing a 99% drop from an August 2025 peak, indicating a significant concentration of treasury bitcoin holdings in Strategy.
