In 2025, Strategy (MSTR 0.23%) is up almost 30%, while Bitcoin (BTC -2.57%) is only up 11% (as of June 19). But that doesn’t make Strategy a better investment than Bitcoin. For long-term investors, it’s still better to invest in Bitcoin than a Bitcoin treasury company.
This might be surprising, given that Strategy is now inspiring copycats all over the world. While Strategy’s recent stock market performance is impressive, the Bitcoin treasury company strategy lacks the long-term staying power that some people might think. Let’s take a closer look.
Image source: Getty Images.
The rise of the Bitcoin treasury company
Strategy began accumulating Bitcoin in August 2020. Over the next four years, it transformed into the world’s largest corporate holder of Bitcoin. Then, in February 2025, it took the next step and officially became a Bitcoin treasury company.
Strategy still has a legacy software business, but that’s mostly an afterthought these days. Strategy’s core mission is to buy as much Bitcoin as it can, regardless of how high the price of Bitcoin goes. This Bitcoin then goes on its balance sheet, just like any other treasury asset, such as cash.
But there’s an obvious difference between holding cash on your balance sheet and holding Bitcoin on your balance sheet: Bitcoin is much more volatile. When the price of Bitcoin is going up, this can be wonderful. The value of your company can rise dramatically without you doing much of anything. But when the price of Bitcoin goes down, this results in a direct hit to shareholder equity, dragging down the value of the company.
Risk factors
If Bitcoin treasury companies were financing all their Bitcoin purchases with cash from ongoing operations, this might not be a big deal. Over time, the value of Bitcoin is likely to move much higher, and it’s just a matter of hunkering down and outlasting any downturn in the market until the price of Bitcoin recovers. Individual investors do this all the time.
However, Bitcoin treasury companies are now using various forms of debt, including convertible notes and senior secured notes, to finance their Bitcoin purchases. Since Bitcoin treasury companies make no pretense of generating enough cash from operations to cover anything more than basic expenses, this is where the problems can start to occur.
Some have referred to this as a Bitcoin loop. New issuances of debt are used to buy new Bitcoin. This new Bitcoin then boosts the value of the company. This keeps shareholders happy and helps to attract new investors to buy the next debt offering.
If something about this sounds a bit risky, that’s because it is. Realistically, how long can companies keep this Bitcoin loop going? It’s all based on the premise that Bitcoin will keep going up forever.
In fact, some corporate finance professors and financial analysts have controversially referred to the Bitcoin treasury company business model as a potential Ponzi scheme in the making. And some Wall Street hedge fund managers have started to take notice as well, arguing that companies such as Strategy could be wildly overvalued.
Coinbase Global (COIN 4.43%), too, has raised the alarm bells. In a recent report (“Attack of the Clones”), the cryptocurrency exchange warned of the “imminent” risk of systemic collapse as companies brazenly rush to buy as much Bitcoin as they can. In a worst-case scenario, says Coinbase, the collapse of just a single highly leveraged Bitcoin treasury company could be enough to drag down the entire crypto market.
While there might not be a need to fear the collapse of Strategy, which has been buying Bitcoin for years now, there is reason to be concerned about the smaller companies getting involved. Since February 2025, when Strategy officially rebranded as a Bitcoin treasury company, the number of new companies getting involved with Bitcoin is almost too high to count. And many of them have little to no experience with crypto.
Buy Bitcoin, not Bitcoin treasury companies
It’s up to you, of course, to decide whether the concept of the Bitcoin treasury company is a stroke of genius or a risky gamble. Have these Bitcoin treasury companies really discovered a new way to generate shareholder value and outperform the broader market?
From my perspective, the answer to this question boils down to a core principle from investing: Higher potential rewards are the result of taking on higher levels of risk. Bitcoin treasury companies are able to outperform Bitcoin by taking on more risk. They do this by using leverage. If they take on too much leverage, that’s problematic.
At the end of the day, I’m buying Bitcoin and ignoring all the hype and buzz surrounding Bitcoin treasury companies. Buying crypto is already risky enough; there’s no need to introduce even more risk into the equation.
