Franklin Templeton: The outlook for corporate encryption financial strategies is fraught with uncertainty, presenting a "dangerous" feedback loop risk.

PANews, July 3 news, according to The Block report, Franklin Templeton digital asset analysts issued a warning in a report that the future of corporate encryption financial strategies is filled with uncertainty, depending on several key factors. Although this model can create upward space through premium financing, asset appreciation, and stake returns, negative feedback loops may trigger a “particularly dangerous” spiral fall. The report points out that currently, 135 listed companies have adopted Bitcoin financial strategies, financing the holding of digital assets through equity and convertible bonds. This model relies on the volatility of digital assets to enhance the option value of financial instruments like convertible bonds, and a price increase can create a positive cycle. However, analysts warn that if the price-to-book ratio falls below 1, equity financing will turn into a dilution effect, forcing companies to sell off assets for protection, which in turn exacerbates the fall in coin prices and the collapse of investor confidence, creating a vicious cycle. The report emphasizes that maintaining a premium on the price-to-book ratio, sustaining value-added trading, and the ability to respond to market fluctuations will be key to the long-term survival of such companies. Analysts believe that the current risks are more complex than during the Terra or Three Arrows Capital period, but significant pullbacks or a prolonged bear market could still trigger catastrophic chain reactions.