Public firms are using borrowed funds to buy Bitcoin, raising concerns about forced selling during downturns.
Coinbase has raised concerns over the growing number of listed companies allocating significant funds to Bitcoin reserves. In its latest market outlook, the exchange warned that while the trend may appear bullish in the short term, it introduces potential systemic risks to the wider crypto sector.
Following changes to accounting standards last December, firms are now permitted to report unrealised gains from crypto assets. The shift has sparked a surge in demand, with 126 public companies currently holding over 819,000 BTC—valued at more than $87 billion.
Many of these companies have used debt financing, often via convertible bonds, to build their Bitcoin positions.
Coinbase cautioned that a downturn in Bitcoin’s price could trigger widespread selling, as companies attempt to…
