Edwards: Bitcoin treasuries’ debt could trigger cascading sales

Charles Edwards, founder of Capriole Investments, warned that about 200 bitcoin treasury companies are taking on debt at record rates to fund bitcoin purchases and that a synchronized unwind of that leverage could trigger cascading forced sales.

Edwards renewed a warning first raised in October 2025 and described digital asset treasuries, or DATs, as public companies that raise capital through debt or share sales to accumulate bitcoin on their balance sheets. He said the model increases bitcoin-per-share metrics when prices rise but depends on continued access to capital and favorable market conditions.

“Bitcoin DATs are levering up at record rates,” Edwards wrote, calling the strategy an “unsustainable business model” that produces a type of manufactured or “fake ‘yield'” by issuing new debt and equity.

On-chain and market data cited by Edwards show buying by treasuries outside the largest holder has dropped sharply. Non-leader firms bought about 1,000 BTC over a recent 30-day period, roughly a 99% decline from an August 2025 peak. The firm that popularized the model, Strategy Inc. (Nasdaq: MSTR), now holds about 76% of all corporate bitcoin.

The strain is visible at some companies that repeatedly used debt to grow their holdings. One Japanese company completed about 20 rounds of debt-for-bitcoin financing, including zero-coupon bonds, while pursuing an aggressive accumulation target. The company reported a roughly $725 million quarterly loss even as its bitcoin holdings rose above 40,000 BTC.

Recent market moves have added pressure. Bitcoin fell below $60,000 and posted its worst week since the 2022 FTX collapse, while record exchange-traded fund outflows removed liquidity from the market.

Edwards described how the financing mechanics work: borrowing magnifies returns when bitcoin rises, and the same leverage increases the need to raise cash, service debt or sell holdings when prices fall. He added that many treasuries’ bitcoin-per-share growth figures often reflect capital issuance rather than operating income.

“It can be viewed as a flywheel that works only while capital markets stay open and prices stay high,” Edwards wrote.

Digital asset treasuries remain a growing portion of corporate bitcoin ownership. Their use of borrowed funds and equity issuance changes the balance sheet dynamics of public bitcoin accumulation and affects which firms are likely to face pressure first if prices decline.