"A Dangerous Scenario"... Major U.S. Asset Management Firm Warns About 'Bitcoin Financial Strategies'

Franklin Templeton, a leading U.S. asset management company, has warned about the risks of corporate Bitcoin (BTC) financial strategies.

On the 2nd (local time), Franklin Templeton stated in a report, "Corporate Bitcoin financial strategies indicate that crypto adoption led by institutional investors has reached a new phase," but added, "(However) this is not a risk-free model." Franklin Templeton further highlighted that "maintaining premiums relative to net asset value (NAV), ongoing transactions with cumulative effects, and managing market volatility will be key factors in the long-term success of (Bitcoin financial strategies)."

Franklin Templeton pointed out that a continued decline in Bitcoin prices could trigger a vicious cycle. The firm stated, "If declines in cryptocurrency prices continue, companies may sell off their assets to defend their stock prices. This could undermine cryptocurrency values and investor confidence, leading to a 'negative feedback loop,'" they said. They continued, "(In this situation) it could become a dangerous scenario," adding, "While the financial model may remain sustainable as long as premiums are maintained, a sharp or prolonged bear market could eventually make these companies high-risk investment targets."