The dramatic year-end fall in the value of cryptocurrencies has sent shockwaves through the corporate world, severely impacting companies that made large bets on bitcoin. Share prices have tumbled, reviving fears of a speculative bubble and forcing a hard look at the risks of such investments.
Why Companies Piled Into Bitcoin
Bitcoin experienced a massive surge earlier in the year, hitting an all-time high above $126,000 in October 2025. This incredible rally tempted many firms to start buying and holding the digital asset. Their reasons varied: some wanted to diversify their cash reserves, others sought a hedge against inflation, and many aimed to attract investors hungry for high returns.
While crypto-native businesses like exchanges and mining companies were natural holders, the trend spread to firms in completely unrelated industries. This wave of corporate buying helped fuel demand and push bitcoin's price to even greater heights.
The Hidden Risks of Corporate Crypto Bets
This strategy, however, came with significant hidden dangers. Many companies did not use plain cash to purchase bitcoin. Instead, they took on debt, betting that the cryptocurrency's price would continue its upward climb. A popular instrument was the convertible bond, which offers lower interest rates with the option for lenders to be repaid in company shares instead of cash.
The model works well when share prices are rising. But it faces immediate trouble if a company's stock falls—a scenario that often follows a drop in bitcoin's price, as it makes the firm's entire business model less attractive to investors. In such cases, bondholders can demand repayment in cash, creating a severe liquidity crunch for the company.
The Domino Effect of Falling Prices
The trouble began after the summer of 2025 when bitcoin started to decline, eventually slipping below $90,000 in November. This eroded confidence in companies with heavy exposure. "The market quickly started to ask: 'Are these companies going to run into trouble? Could they go bankrupt?'" noted Eric Benoist, a tech and data expert at Natixis bank.
Professor Carol Alexander from the University of Sussex pointed out that beyond price volatility, regulatory uncertainty, cyberattacks, and fraud risks are deepening investor mistrust in the sector.
Case Study: Strategy and Sequans
The software giant Strategy, the world's largest corporate bitcoin holder with over 671,000 coins (about 3% of all bitcoin that will ever exist), felt the pain acutely. Its share price more than halved in six months, and its market value at one point fell below the total value of its bitcoin stash.
The pressure stemmed from its extensive use of convertible bonds, exposing it to massive cash repayment risks. To calm investors, Strategy issued new shares to create a $1.44 billion reserve to cover dividends and interest.
Another firm, semiconductor maker Sequans, chose a different path. It sold 970 of its bitcoins to pay down a portion of its convertible debt. Both companies did not respond to requests for comment from AFP.
Contagion Fears and Sector Outlook
There is a risk that if struggling companies are forced to sell large bitcoin holdings en masse, it could drive prices down further, creating a vicious cycle. "The contagion risk in crypto markets is pretty considerable," warned Professor Alexander. She believes, however, that the fallout will likely be contained within the crypto sector, posing no major threat to traditional financial markets.
Despite the turmoil, some remain optimistic about the long-term play. "Bitcoin is inherently volatile in both directions, and we view that volatility as the cost of long-term upside," said Dylan LeClair, head of bitcoin strategy at Japan's Metaplanet, a former hotel company now holding around $2.7 billion in bitcoin.
Looking ahead, Eric Benoist of Natixis suggests that for the model to survive, companies must find ways to generate income from their bitcoin holdings—through financial products or services—rather than relying solely on price appreciation. "Not all of them will survive," he concedes, but "the model will continue to exist."
New initiatives are emerging, like The Bitcoin Society, a crypto treasury firm founded by French entrepreneur Eric Larcheveque. He sees the price drop as "a good opportunity because it allows you to buy more bitcoin cheaply." The dramatic events of late 2025 have served as a stark reminder that in the high-stakes world of cryptocurrency, corporate treasure can quickly turn into corporate trouble.
