Bitcoin treasury companies carried about $12.7B of outstanding debt, with Strategy accounting for $8.2B.
Galaxy’s Alex Thorn dismissed recent blow-up concerns, stating that their debt will mature in two years.
Galaxy Digital has downplayed concerns that Bitcoin [BTC] treasury companies’ debt-burden blow-up could trigger the next bear market phase.
In an X (formerly Twitter) post on Wednesday, Galaxy’s Head of Research, Alex Thorn, said that the debt worries are “overblown.”
“I know some are worried about the bitcoin treasury companies and their debt becoming a problem, but for now, we think those fears are overblown.”
He added that the issue wasn’t a concern now because most of the debt maturity will begin from 2027.
Source: Galaxy
BTC treasury firms’ $12.7B debt
Specifically, most analysts have flagged Michael Saylor’s Strategy (formerly MicroStrategy) as a risk factor, given the perceived massive debt used to acquire its 580.9K BTC holdings.
Notably, Strategy, alongside other public companies like MARA, owns 3.65% of the total BTC supply, underscoring market risk in case they go bankrupt.
According to one user, the companies could trigger the next bear market.
“Bitcoin treasury companies won’t prevent another bear market; they’re the reason it’ll happen again this cycle.”
There has been debate that the firms may help reduce the impact of the next massive BTC drawdown. In fact, Bernstein analysts recently projected that these firms could drive +$330B inflows to the asset by 2029.
But others doubted whether the new Strategy copy-cats could survive a bear market. In fact, Max Keiser, BTC advisor to El Salvador’s Nayib Bukele, said,
“Saylor never sold, and just kept buying, even when his BTC position was underwater. It’s foolish to think the new Bitcoin Treasury Strategy clones will have the same discipline.”
A similar caution was shared by Standard Chartered’s Head of Digital Assets Research, Geoffrey Kendrick. In a letter to clients this week, he wrote,
“Bitcoin treasuries are adding to Bitcoin buying pressure for now, but we see a risk this may reverse over time…They could become a source of downside price pressure and volatility.”
Galaxy Digital’s report acknowledged the debt concern by treasury companies, especially Strategy.
“As of May 27, there was at least $12.703 billion of outstanding debt carried by bitcoin treasury companies. Strategy carries the most outstanding debt at $8.214 billion, accounting for 64.66% of the observed outstanding debt.”
However, the report maintained that most Strategy’s debt matures in 2027-2030, and shouldn’t be an issue in the mid-term.
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