The cryptocurrency environment is incredibly dynamic. Tackling our present-day challenges This dynamic environment requires no less than a continuous reevaluation of our strategies and a reflection of new realities. DreamingCrypto explores a recent report by Breed VC that sheds light on a concerning trend among Bitcoin treasury companies: the "death spiral." This isn't the technical death spiral sometimes discussed within Bitcoin's protocol, but a market-driven phenomenon that threatens companies clinging to a "hold and hope" strategy.

Understanding the 'Death Spiral'

Breed VC takes the “death spiral” premise very seriously. It occurs when firms focus solely on the appreciation of Bitcoin’s value to sustain their business activities. This hands-off philosophy is a liability when the market stalls or turns south. The report suggests that simply holding Bitcoin and waiting for its value to rise is no longer a viable long-term strategy for these companies. It will take companies being as proactive, creative and collaborative as they can to chart a course through the dynamic crypto environment toward long-term success.

Approximately 53% of corporate Bitcoin holdings — over 580,000 BTC — is subject to this “strategy strategy.” This strategy, focused on maximizing Bitcoin-per-share, is an incredibly dangerous gamble and would likely result in industry consolidation once the market decides the pressures are too great. Fast forward to May 2025, and those 199 entities now collectively hold a staggering 3.01 million BTC (worth $315 billion). This concentration of wealth places even greater import on educating investors about the dangers of a buy and hold approach gone awry.

To stop a “death spiral,” Bitcoin companies with Bitcoin in their treasury need to begin moving fast. They cannot afford to continue with just incremental change. This means taking an active approach to managing their Bitcoin assets, looking to generate yield, and diversifying their investment strategies. Breed VC's report emphasizes the need for a nuanced evaluation framework to identify and mitigate risks while uncovering potential opportunities in the Bitcoin treasury sector.

Strategies for Survival

Here are some key strategies:

  • Re-evaluate and Revise:
    • Assessing the program’s history and present status.
    • Creating a clear vision and goals for a revised present and future.
    • Executing in the new fashion to achieve that vision.
  • Root Cause Analysis:
    • Focusing on the root cause of a problem using tools like The Five Whys.
    • Addressing issues that lead to errors and higher costs using The Eight Wastes of Lean.

All of these strategies yield a roadmap for companies to proactively address major foundational challenges and be nimble and adaptable to dramatic and rapid market changes.

Insights for Investors

For investors, the Breed VC report offers valuable insights into assessing the risks and opportunities within the Bitcoin treasury sector. That same year, publicly traded companies and private investors each bought more than 157,000 BTC — that’s more than $16 billion. This explosive growth in investment is indicative that Bitcoin is emerging as the preferred long-term treasury asset. Adoption continues to accelerate, driven in part by conditions including long-term inflation hovering around 4 to 5 percent in most G7 economies since 2022. On top of that, global sanctions regimes and capital controls are making Bitcoin a more attractive store of value.

To address this challenging yet promising landscape, Breed VC has created a framework to help impact investors mitigate risks while discovering new opportunities. This framework assists in separating the wheat from the chaff and identifying which companies are proactively managing their Bitcoin treasuries. It exposes those that resort to the “hold and hope” approach. The report urges diversification of reserves; this is an imperative even for sovereign nations. Technological change has the potential to accelerate the adoption of Bitcoin by corporate treasurers.

Investors today have more innovative choices than ever to gain exposure to cryptocurrencies. Among the many creative approaches is one via frameworks tailored for companies that hold bitcoin in their treasuries. Through a detailed analysis of a company’s strategy development, risk management practices, and overall financial health, investors can make more informed decisions. This prudent assessment allows them to reap the rewards of Bitcoin’s long-term appreciation. Support the ones making positive moves toward sustainable, resilient business models that include Bitcoin. Toss aside the hype that accompanies the entire cryptocurrency market.