Can the next Bear Market mark the end of Bitcoin?

Public companies around the world are all in on Bitcoin (BTC) this year. Whether it is through stock or debt issuance, companies are accelerating their push to acquire BTC and add it to their balance sheet. Bitcoin continues to be highly valued, but companies also make profits through stock spikes and paper profits.

But the looming question is, what will happen if the bear market returns? Is institutional confidence stable or will it shake in the face of volatility? Beincrypto spoke to industry experts to find out the potential of the bare market and whether these companies contribute to more stability or downfall.

Is the institutional interest in Bitcoin a double-edged sword?

Over the past few months, Beincrypto has reported extensively on the company’s Bitcoin acquisition. The trends pioneered by (Micro)Strategy co-founder Michael Saylor has inspired many others to follow suit.

Bitunix analyst Dean Chen emphasized that the growing influx of institutional capital has solidified Bitcoin’s position as “digital gold.”

“In the first seven months of 2025, the institution’s net inflow to Bitcoin ETFs exceeded $5 billion, while BlackRock’s Ishares Bitcoin Trust reached over $85 billion in AUM, contributing to BTC’s 26% annual profit,” Chen told Beincrypto.

Additionally, John Glover, Chief Information Officer of Red, has attributed Bitcoin’s reputation for stability in recent years to increased institutional involvement. Glover said that as Bitcoin volatility decreases over time, it behaves more and more like traditional assets.

Nevertheless, like all traditional assets, the market experiences a cycle, usually followed by the Bull Market. He expects Bitcoin’s future bear market will likely not be as serious as it has been in the past cycle. Still, corrections are inevitable.

In particular, the executives added that while the institute brings capital, they also bring constraints.

“Fund managers, public companies, pension committees – these actors aren’t driven by ideology. They answer shareholders. They look at their quarterly performance. They sell when pressure arises,” Glover said.

Chen noted that institutional investors tend to leave faster than retail investors. Therefore, if the market moves in the opposite direction, the RF trading fund and QUANT strategy could potentially sell its position.

However, Redstone’s COO and co-founder Marcin Kazmierczak offered an alternative perspective. He said that while institutional investors may encounter difficulties in the bare market, their involvement has brought sophisticated risk management practices to the cryptocurrency sector.

“Companies with Bitcoin’s Treasury usually have longer investment periods than retailers, which could provide stability even during recessions. The key is that facility adoption diversifies its holder base and potentially reduces volatility compared to previous cycles,” he told Beincrypto.

The success of the corporate finance model for the acquisition of Bitcoin

Institutional investors use a combination of fundraising methods to buy Bitcoin, and debt is the most common. In a post on X, Redbox Global revealed that Bitcoin-focused companies face a significant $12.8 billion debt expiration wall by 2028.

“Marathon Digital and Strategy (led by Michael Saylor) is gazing at a massive barrier to expiration of $12.8 billion by 2028, threatening survival. These companies collectively own more than 725,000 BTC, but many have lost millions, rely heavily on debt and stock sales to fund their purchases.

These concerns are nothing new. Previously, Sygnum Bank and other market analysts also raised alarms about the sustainability of their strategy.

Chen stressed that since 2020, the strategy has raised $428.7 billion by purchasing more than 600,000 BTC with an average cost of $71,268 through Zero Coupon Convertible Notes and Equity Issuance. This strategy will boost Bitcoin accumulation in bull markets. Nevertheless, interest and stock prices have put a strain on the Bare market’s finances.

Furthermore, strategy liabilities account for approximately 24.3% of the capital structure. He added that if Bitcoin falls below a certain threshold, its convertible bonds could cause mandatory conversion or redemption. Marathon Digital is another company that issues equity before bonds and reduces leverage. Nevertheless, they have a higher cost of capital and limited resilience.

“A survey shows that when a hedge fund or company has a debt-to-stock ratio of more than 30% and an asset price rises by 20%, the probability of default is above 40%. Therefore, companies that rely heavily on debt financing are exposed to credit risk and forced liquidation within the bare market,” Chen said.

Still, Glover highlighted that companies with strong capital structures (sloping and maturing or lower interest rate debts) bring better fares. He said that a model of strategy can handle significant losses. However, new businesses are at a higher risk of forced sales during recession.

“Tesla’s $97 million impairment indicates what happens when Bitcoin is just idle. If you’re not over-employed, the bear market will turn your financial assets into liability,” he added.

Anthony Georgiades, founder and general partner of Innovating Capital, is also known as strategy and “high stakes play.”

“If BTC drops significantly, highly utilized companies can have a hard time refinancing or fulfilling their obligations. Relying heavily on the debt of a company can become prolonged weakness and vulnerable,” he commented to Beincrypto.

Meanwhile, Kazmierczak noted that companies using convertible debt strategies demonstrate innovative ways to balance growth and risk management. According to him, their effectiveness depends ultimately on the strength of their core business and their ability to serve their debts through operational cash flows rather than purely relying on Bitcoin valuation.

He believes that smart financial strategies include a good sizing position compared to the overall balance sheet. Kazmierczak detailed that many public companies holding Bitcoin demonstrate healthy management by treating BTC allocations as part of their overall reserves.

“Mass sales seem unlikely as they crystallize losses and go against the long-term strategies stated. Companies like micro-strategies overcome previous recessions without selling, suggesting convictions of approaches.

What will happen to Bitcoin prices if the institution starts selling?

Experts have expressed cautious optimism about fundraising strategies, but centralization is more concerned. As of the latest data on Bitcoin Treasuries, the top three publicly listed Bitcoin finance companies collectively own around 695,000 BTC, accounting for 3.31% of the total BTC supply. So what happens when you decide to sell?

“If a single company has nearly 3% of the total supply of current BTC supply, like strategy, that concentration is a market risk. It could cause a cascade if it is forced to sell due to funding pressure, redemption or stock collapse.

He detailed how hedging options are available in this space and market liquidity, such as futures and options, continues to grow. Therefore, Glover hopes that BTC finance companies will be strategic in managing the risks they will withstand the bear market.

Nevertheless, Bitcoin is not the only asset affected. The biggest cryptocurrency decline could lead to a wider market downturn.

LEDN’s CIO emphasized that “Bitcoin is still an anchor for the entire market.” He said that if a large holder launches offloading, even the “secure” end of the crypto will not be secure.

“Historical data shows that when BTC-led capital comes out of the market, Altcoins and Meme Coins tend to be two to three times more negatively. As finance companies engage in large-scale BTC sales, rapid breakdowns at key support levels can cause panic among retail investors, accelerating capital outflows and extending months,” he said.

Factors that can affect a company’s ability to hold Bitcoin

Bitcoin and the crypto sector are not affected by macroeconomic pressures. Whether it was President Trump’s tariffs or the Israeli-Iran conflict, the market responded quickly by entering a free fall.

Experts also outlined the factors that are most likely to affect the ability of BTC Treasury companies to hold Bitcoin through the bear market.

“As interest rates rise and liquidity become more severe, companies often rely on debt to hold Bitcoin. If you can’t refinance at a reasonable cost, things can be unlocked quickly. Inflation adds another layer of uncertainty. Glover shared with Beincrypto.

Furthermore, Bitunix’s Chen revealed that regulatory factors could play a key role. He said clear laws could reduce the cost of compliance for institutions, thereby supporting finance companies to hold Bitcoin over the long term.

In addition to this, shareholder pressure is another important factor to consider. Chen explained that adjusted shareholder actions, such as calling special meetings if Bitcoin crashes, can employ more conservative strategies and force assets to be settled to reduce risk.

“If a company’s stocks drop by more than 50% due to a crash in BTC prices, investors could use proxy voting or public pressure to request liquidation of assets to protect capital. For example, MicroStrategy’s lead short seller Gus Gala once urged them to sell BTC. Furthermore, if a company’s stock price falls below the convertible bond exercise price, creditors could legally promote early redemption and increase pressure on selling BTC,” he reported.

Nevertheless, Glover emphasizes that the potential bear market will not erase Bitcoin. However, it serves as an important test of institutional convictions on assets.