Ben Werkman, CIO of Strive, issued a warning this week to Bitcoin companies that have loaded up on convertible debt. If crypto prices go sideways, he said, those financial structures could backfire in a big way. Werkman urged firms to take a hard look at their funding strategies before the market shifts.
The convertible debt catch
Convertible debt lets firms raise cash by selling bonds that can later turn into equity — often at a discount. That works nicely when prices are climbing because investors get a piece of a rising asset. But when the market stalls, the math gets ugly. Debt still has to be serviced, and if the conversion option loses its appeal, the company is left holding expensive liabilities.
Why stagnation changes everything
Werkman's point is straightforward: Bitcoin's price isn't guaranteed to keep going up. A prolonged flat period would leave these firms stuck making interest payments on debt that investors don't want to convert. The result is a cash crunch just when revenue from other sources might be drying up. It's a risk that many in the space have overlooked during the bull run.
Time for a strategy check
The warning isn't a prediction that prices will drop — it's a call to prepare for a scenario where they don't rise. Werkman recommends that Bitcoin firms diversify their funding sources and reduce reliance on instruments that only work in a rally. That could mean tapping equity, revenue-based financing, or even old-fashioned bank loans with fixed terms.
The warning from Strive's CIO adds a note of caution for an industry that has embraced convertible debt as a fast way to grow. Whether firms will listen remains an open question, but the message itself is a cold dose of realism.
