Peter Chung, head of research at Presto Research on Monday warned that investors eyeing companies holding large Bitcoin (CRYPTO: BTC) reserves should pay close attention to “red flags” before allocating capital.
What Happened: Speaking to CNBC, Chung said that while firms like Strategy inspired a wave of copycats, not all of them have the same fundamentals or execution capacity.
“The two key things that you need to watch out for is, first one is, the underlying asset has to be an asset that has the potential to become a monetary asset,” Chung explained. “The second thing is the management’s execution capability. This operation requires ability to navigate the public capital market and structure the right instruments.”
The sector is dominated by a handful of firms holding tens of thousands of Bitcoin.
Strategy leads with 636,505 BTC, far ahead of MARA Holdings (NASDAQ:MARA) at 52,477 BTC, 22nd Century Group Inc.
(NASDAQ:XXI) with 43,514 BTC, Bitcoin Standard Treasury Company (NASDAQ:BSTR) at 30,021 BTC, and Bullish (NASDAQ:BLSH) with 24,000 BTC, according to BitcoinTreasuries.net.
Chung pointed out that Bitcoin has already achieved widespread recognition as a monetary asset, but warned that companies building treasuries with less established tokens expose investors to added risks.
“Once you start to move away from Bitcoin and go down the list, you have to ask a lot of questions,” he said, noting that Ethereum (CRYPTO: ETH) and Solana (CRYPTO: SOL) were gaining traction but other assets may be less reliable.
Also Read: Sora Ventures Launches $1 Billion Bitcoin Treasury Fund To Accelerate Corporate Adoption Across Asia
Why It Matters: The growth of Japanese firm MetaPlanet (OTC:MTPLF) was cited as an example of how regulatory environments and investor incentives shape outcomes.
Japan’s tax-exempt NISA program has made exposure via company shares more attractive than direct Bitcoin purchases, drawing both retail and institutional demand.
However, Chung cautioned that recent share sales and preferred share issuance highlighted the complexity and risks of such treasury strategies.
“Something exotic may not really fly very well in crypto,” Chung said, stressing that financial engineering alone is not enough to sustain a treasury-backed business model.
He added that many listed firms lack the institutional experience required to manage capital markets effectively, creating a long tail of weaker players.
The rapid rise of Strategy, which grew from a $1 billion to a $100 billion market cap through aggressive Bitcoin accumulation, remains the template for many firms.
But Chung warned that not all companies are equipped to repeat the feat, underscoring the importance of assessing both the quality of underlying assets and managerial expertise.
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This article Two ‘Red Flags’ You Need To Watch When Investing In Bitcoin Treasury Firms originally appeared on Benzinga.com
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