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The Coin Rise 2025-07-03 16:28:55

Franklin Templeton Analysts Warn Of Dangers of Corporate Crypto Surge

Analysts at Franklin Templeton Digital Assets have expressed concerns about public companies using bold strategies to hold cryptocurrencies on their balance sheets. While the rewards may seem high, analysts warned that this trend could backfire in dangerous ways. A new report outlines how this fast-growing strategy may create a cycle of profits or losses that could spiral out of control. The Rise of the Corporate Crypto Treasury A growing number of public companies are now adopting a crypto treasury strategy. These firms raise money through equity, convertible notes, preferred shares, and other financial tools and use the funds to buy and hold crypto assets. According to data from Bitcoin Treasuries, at least 135 public companies now hold Bitcoin as part of their treasury. The strategy gained popularity after the one led by Michael Saylor made headlines by transforming the company’s balance sheet into a Bitcoin vault. Following this trend, companies such as MARA, Metaplanet, Twenty One, and Sol Strategies have also adopted this approach. Other firms are also focusing on other crypto assets, such as Solana , Ethereum, and XRP, for long-term growth. Franklin Templeton Analysts Say This Strategy Works – For Now Analysts say this model can be very profitable, especially during a crypto bull market. Companies can raise capital at prices above the actual value of their crypto holdings. This gives them an edge. Every new share they sell generates more money than their assets are worth, allowing them to grow faster without relinquishing too much ownership. Surprisingly, crypto volatility, though risky, can help boost companies’ values. This comes as big crypto swings do make tools like convertible notes more valuable due to the embedded options they carry. Additionally, rising crypto prices also boost stock prices, attracting more investors. Franklin Templeton Analysts Outline the Dark Side of the Boom However, there is a catch. If the stock price of these companies falls below the value of their crypto holdings, known as the net asset value (NAV), trouble starts. At that point, issuing new shares becomes harmful to current investors because it reduces the value of their shares. Analysts say this is called dilution. Even worse, falling crypto prices can trigger a negative feedback loop. If companies attempt to sell crypto to prevent their stock from falling, they may push prices even lower. Analysts consider this scenario particularly dangerous, as it could deter investors, leading to further selling and a downward spiral of losses. Franklin Templeton is not alone in raising red flags. Last month, analysts at Presto Research stated that these companies face a real risk of collapse if things go south. However, they believe the risks are more complex than those of past crises, such as Terra or 3AC. Meanwhile, David Duong from Coinbase Institutional warned that highly leveraged crypto buying by companies might create broader risks for the financial system over time. Still, Duong believes any immediate threats remain low. The post Franklin Templeton Analysts Warn Of Dangers of Corporate Crypto Surge appeared first on TheCoinrise.com .

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