Investing in Bitcoin: Balancing Self-Custody and Corporate Risk
Exploring the Impact of Corporate Adoption on Bitcoin's Future
More and more public companies are aligning themselves with Bitcoin, as its price has shown a positive correlation with their stock values following announcements of Bitcoin purchases for their treasury. A notable example is Strategy, which, as of June 9, 2025, owns 582,000 Bitcoins. Their stock has soared, prompting many others to consider a similar approach.
While the growing interest from public companies in Bitcoin may boost its price in the short term, it also has the potential to strengthen the long-term ecosystem. Although some companies might be leveraging Bitcoin to mask underlying financial weaknesses, the overall trend reflects a broader institutional recognition of Bitcoin as an asset class. If these companies are genuinely committed to holding Bitcoin as a long-term store of value, it could signal a shift towards greater acceptance and stability for Bitcoin in the financial landscape. This increased institutional interest not only enhances Bitcoin's legitimacy but also attracts more investors, ultimately fostering a more robust market. However, uncertainties remain, and the true impact of this trend will continue to unfold as the market evolves.
Take GameStop, for instance. Recently, the company announced its plan to raise additional debt through a proposed bond deal to fund general corporate purposes, including Bitcoin purchases. Between May 3 and June 10, GameStop acquired 4,710 Bitcoins. While GameStop may be positioning itself as a Bitcoin player, its stock has been slipping due to weaker-than-expected first-quarter revenue. Following its earnings report, GameStop shares fell over 11% in after-hours trading, having already dropped 5.3% during the regular session. The company reported sales of $732.4 million for the quarter ending May 3, down from $681.8 million the previous year.
Standard Chartered Bank issued a warning in a June 3 report, stating that half of corporate treasuries risk going underwater if Bitcoin falls below $590,000. A 22% drop from average purchase prices could trigger selloffs and liquidations.
Many companies holding Bitcoin are trading at net asset value (NAV) multiples greater than one, meaning their market capitalization exceeds the value of the Bitcoin they possess. According to analysts at Standard Chartered, this discrepancy arises because regulatory constraints in some jurisdictions prevent direct investments in cryptocurrencies or ETFs, making Bitcoin-holding companies an attractive workaround for institutional investors. As the global regulatory landscape evolves and Bitcoin ETFs become more accessible, the demand for such proxy exposure is likely to diminish. When that happens, companies trading at inflated NAV multiples could face downward pressure on their valuations, especially if their core business does not justify such premiums.
I advocate for holding Bitcoin through self-custody whenever possible, but if direct exposure is difficult, consider Bitcoin ETFs or public companies with strong fundamentals that hold Bitcoin on their balance sheets. It's crucial to research how these companies fund their Bitcoin purchases and manage their debt, as poorly planned strategies could increase their vulnerability during market downturns. While I remain bullish on Bitcoin's long-term prospects, I acknowledge the potential for significant volatility and risks associated with investing through public companies or ETFs, including hacks and market disasters. Additionally, the growing adoption of Bitcoin by corporations and ETFs raises concerns about its decentralization, which is fundamental to its design as a cryptocurrency that offers unrestricted access to financial services for all.
In conclusion, the best strategy, in my opinion, is to buy Bitcoin and maintain self-custody. I’ve learned that prices don’t rise indefinitely, and if volatility leads to price corrections, it could present a great opportunity for me to accumulate more. Stay focused, think long-term, and keep stacking sats.
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