Franklin Templeton: The prospects of corporate crypto financial strategies are fraught with uncertainty, posing a risk of a "dangerous" feedback loop

ChainCatcher news, according to The Block, Franklin Templeton's digital asset analysts warn that there is uncertainty about the future of corporate cryptocurrency treasury strategies, noting that negative feedback loops represent a "particularly dangerous scenario."

The analysts state that while this strategy has advantages such as financing at a premium over net asset value, asset appreciation potential, and staking yields, it also faces significant risks. If the market capitalization to net asset ratio falls below 1, new equity issuance will create a dilution effect, making it difficult for companies to raise additional funds.

The analysts conclude that the cryptocurrency treasury model represents a new phase of institutional cryptocurrency adoption, but maintaining net asset premiums, continuously engaging in value-added transactions, and responding to market volatility will be key factors for these companies' long-term success.