Matthew Sigel, head of digital assets research at VanEck, has sounded the alarm for public companies that issue new shares to buy Bitcoin.
He cautions that when a company’s stock price falls to the same level as its Bitcoin holdings per share, forcing more shares onto the market can erode value rather than create it.
Warning from VanEck
Sigel pointed out on the social platform X(Twitter) that no public firm has traded below the net asset value of its Bitcoin for an extended period.
However, he noted that one company, Semler Scientific, is nearing that break‑even point. He urged firms to put safeguards in place while their shares still trade at a premium to their Bitcoin assets.
Risks of Equity Issuance
Issuing equity through at‑the‑market programs allows companies to raise cash quickly. Many have used this approach to scoop up more Bitcoin.
But if the share price dips to match the value of the underlying crypto, selling new stock simply dilutes existing shareholders without adding real value. Sigel warned that beyond that point, dilution shifts from being a strategic move to an extractive one.
Calls for Strategic Safeguards
To avoid this trap, Sigel recommended that companies pause share issuance if their stock trades below 95% of Bitcoin’s net asset value for at least ten trading days.
He also said boards and executives should align their pay with net asset value per share growth rather than the size of the Bitcoin balance or total share count.
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Small‑Cap Firms Chase Crypto Treasuries
Beyond the high‑profile Bitcoin treasury companies, a growing number of smaller public firms are plotting to amass digital tokens. Many listed on the Nasdaq yet have market capitalisations under $100 million.
These companies have announced plans to build multi‑million dollar holdings in assets such as XRP and Solana. Critics question how these tiny firms can raise such sums when their valuations are so modest.
Why This Matters?
The rapid rise of corporate Bitcoin treasuries has drawn both enthusiasm and scrutiny. On one hand, it signals mainstream acceptance of digital assets.
On the other hand, it exposes shareholders to sharp swings if company shares fail to keep pace with crypto prices. Sigel’s warning highlights that firms must plan for both good times and downturns.
Small‑cap companies piling into crypto treasuries add another layer of risk. Their low trading volumes and limited capital make them vulnerable to market moves and regulatory shifts.
If they misjudge investor appetite or encounter liquidity problems, their share prices could collapse, harming both the companies and their stakeholders.
Bitcoin is trading at $107,150.01, up 1.88% over the past 24 hours. The total market capitalisation of all cryptocurrencies sits at $2.13 trillion, while trading volume has climbed 20.03% in one day. This bounce in price comes as investors watch closely how public firms manage their Bitcoin strategies.
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