https://www.wsj.com/finance/currencies/crypto-treasury-e7ae573c?mod=hp_lead_pos1
The Hottest Business Strategy This Summer Is Buying Crypto
Small companies are raising billions of dollars to buy bitcoin and other, more obscure cryptocurrencies. What could possibly go wrong?
By Gregory Zuckerman and Vicky Ge Huang, The Wall Street Journal, July 25, 2025
It’s the hottest trade of the summer.
Companies are raising tens of billions of dollars, not to invest in their businesses or hire employees, but to purchase bitcoin and more obscure cryptocurrencies…
The companies that are taking the plunge are being transparent about their plans to raise cash and put it all in crypto. They argue that they can do things an ETF cannot, such as “stake” tokens, or lock them up for a specified amount of time to earn a return. The companies can also borrow money to buy additional cryptocurrencies, something ETFs also can’t do…
Since June 1, 98 companies have announced plans to raise over $43 billion to buy bitcoin and other cryptocurrencies, according to Architect Partners, a crypto advisory firm. Nearly $86 billion has been raised for this purpose since the start of the year. That’s more than double the amount of money raised in initial public offerings in the U.S. in 2025, according to Dealogic…
Lately, tiny companies are working with recognized names in finance to raise cash to buy crypto. … [end quote]
OMG!!! This is crazy!!! It’s a pure speculative frenzy that is characteristic of a late-stage bubble.
How many ways is this crazy?
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Non-financial companies exist to profit from selling products and services, not by speculation.
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How do companies “raise money”? By selling shares in the company or by borrowing. Either way they put their main business at risk. Crypto currencies don’t produce dividends or interest but money that’s borrowed to buy crypto will require interest payments. If (when) the value of the cryptocurrency plunges they could bankrupt or lose control of their company. Especially if they are leveraged (bought with borrowed money).
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Why in the world would an investor lend (or buy shares in) a company to buy crypto? If they wanted crypto exposure they could just buy crypto themselves (or an ETF). If they want to invest in the company why would they want to increase their risk by crypto speculation?
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Why would a company “work with recognized names in finance to raise cash to buy crypto”? The so-called “recognized financier” will take their own cut, reducing any profit from the crypto.
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When a bubble bursts it usually is sudden, sharp and irrevocable. (cf. “Manias, Panics and Crashes.”) A small company with a crypto investment could lose most of it practically overnight.
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Small businesses make up 99.9% of all companies in the U.S. A significant portion of these small businesses (over 80%) are nonemployer firms, meaning they have no paid employees other than the owner(s). I can picture an entrepreneur approaching friends or family and asking to borrow money for the business and then investing it in crypto. This is like the 1929 shoeshine boy who gave a stock tip to J.P. Morgan.
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According to data from the U.S. Small Business Administration (SBA), small businesses (1 to 499 employees) account for approximately 39.0% of the private sector payroll , which translates to about $3.2 trillion annually. This shifts the risk to the Macroeconomic scale. It’s horrifying to think that this speculative behavior could spread to small but significant employers.
There’s always risk when investing.
There’s a big difference between the normal business cycle and a financial crisis. I’m always on the lookout for trends that could trigger a financial crisis which involves spreading and deepening losses.
Crypto speculative losses by employers could cause layoffs of employees that aren’t caused by the business cycle. Like all major layoff cycles this could trigger a recession as the laid-off employees spend less.
What could go wrong? OMG!!!
Wendy
