A Year-Old Warning Resurfaces
Bitcoin treasury companies are taking on debt at record rates to fund their bitcoin purchases, Capriole Investments founder Charles Edwards warned. He tied the trend back to a call he made in October 2025, arguing that the digital asset treasury (DAT) model is structurally incentivized to rely on borrowing to manufacture returns, further adding:
“ Bitcoin DATs are levering up at record rates. Back in Oct 2025 I warned exactly this would happen as this unsustainable business model is incentivised to rely on debt to generate fake ‘yield’.”
His core objection is to how the strategy generates its headline returns. A digital asset treasury, or DAT, is a public company that raises capital (often through debt or share sales) to accumulate bitcoin on its balance sheet. The model, pioneered by Strategy Inc. (Nasdaq: MSTR), can amplify gains when bitcoin rises, but it also adds leverage so that when prices fall, firms that borrowed to buy can face pressure to raise cash, service debt, or sell.
The 1929 Comparison and “Fake Yield” Narrative
Earlier this year, Edwards compared the rapid buildout of DATs to the leveraged investment trusts of 1929, calling them a “ leverage explosion waiting to happen.” He pointed to the roughly 200 bitcoin treasuries now in existence and argued that the more they lever up, the more a drawdown can cascade through forced deleveraging, with each seller pushing the price lower for the next.
Moreover, his “fake yield” charge cuts at how treasury firms market themselves, given that many tout a bitcoin-per-share growth metric as a form of yield. Edwards contends the figure is largely a product of issuing new debt and shares rather than genuine income. In simpler terms, it can be viewed as a flywheel that works only while capital markets stay open and prices stay high.
With so many public companies and exchange-traded funds (ETFs) now holding bitcoin, a synchronized unwind, in his view, could turn an ordinary correction into something sharper.
The Strain Is Already Showing
The warning arrives as the treasury model faces real stress, with Bitcoin.com News reporting earlier this month that bitcoin treasury companies are facing a borrow-or-sell test, with the question shifting from accumulation to liquidity (i.e. how firms fund dividends, debt costs, and other commitments without cutting BTC exposure).
That pressure has reached the top of the market as Cryptoquant data showed treasury buying outside Strategy has collapsed with non-Strategy firms buying a combined 1,000 BTC over 30 days, a 99% drop from an August 2025 peak. Consequently, Strategy now holds roughly 76% of all corporate bitcoin.
Others are leaning harder into leverage. Japan’s Metaplanet, for instance, executed about 20 rounds of debt-for- BTC financing in roughly two years, including zero-coupon bonds, as it chases a 100,000 BTC target. Bitcoin.com News reported the company posted a $725 million quarterly loss even as its stack reached 40,177 BTC.
Why It Matters Now
Bitcoin recently posted its worst week since the 2022 FTX collapse, sliding below $60,000 as record exchange-traded fund (ETF) outflows hit the market. In a downturn, the financial engineering that powered the treasury boom on the way up can work in reverse, pressuring the most indebted firms first.
Looking ahead, if BTC recovers, the leverage that worries Edwards could once again look like savvy financial engineering. If the downturn drags on, the most leveraged treasuries will be the first to feel it.
