The current downturn in the cryptocurrency market has brought significant challenges for digital asset treasury stocks, signaling a critical phase of survival for many firms. The excitement that surrounded the surge of Bitcoin during the first half of 2025 has dissipated, replaced by harsh realities as companies grapple with substantial losses.
More than 180 public companies had ventured into holding digital tokens, influenced by a bullish market that had many adopting debt-driven strategies reminiscent of Michael Saylor“s approach in 2020. However, the tide turned in October when Bitcoin”s value sharply declined, forcing the sector into a defensive posture.
In recent months, many treasury firms have found themselves dealing with unrealized losses and declining stock values. For instance, Strategy has witnessed a 40% drop in its stock price since October 10, with other firms experiencing even steeper declines. KindlyMD (NAKA) has fallen by 39%, while American Bitcoin (ABTC), led by Eric Trump, has seen a staggering 60% decrease. Similarly, ProCap Financial (BRR) has plummeted by 65%.
Firms that have significant holdings in ether have not been spared either. Bitmine Immersion Technologies (BMNR), chaired by Tom Lee, has dropped over 33% alongside a more than 25% decline in ether”s value. Other companies like SharpLink Gaming (SBET) and Bit Digital (BTBT) have each recorded losses close to 40% over the last two months.
One crucial metric under scrutiny is the market net asset value (mNAV), which compares a company”s market capitalization with the value of its crypto holdings. An mNAV below 1 indicates that the market values the firm at less than the worth of tokens it holds. Strategy”s mNAV approached 1x in late November, raising concerns that the company may need to liquidate some of its Bitcoin to manage dividends and debt obligations. In response, the firm has secured a cash reserve of $1.44 billion, which should sustain its payouts for 21 months if market conditions remain volatile.
As the landscape shifts, Strategy has also taken steps to engage with MSCI regarding its upcoming decision on firms with significant crypto holdings. Analysts from Bernstein have suggested that while concerns surrounding Strategy may be overstated, many of its imitators remain at risk, facing challenges in raising long-term capital.
A report from Bitcoin Treasuries revealed that out of 100 bitcoin treasury firms with identifiable cost bases, 65 acquired Bitcoin at prices above its current level, leaving them vulnerable. During last month”s sell-off, five companies sold a total of 1,883 bitcoins to mitigate losses.
Matt Zhang from Hivemind Capital noted that his team assessed over 100 digital asset treasury firms this year but only chose to invest in a dozen. He compared the situation to the dot-com bubble of 2000, where many businesses lacked viable models. Zhang believes that while every S&P 500 company may eventually hold Bitcoin and ether, mere token possession is insufficient without supporting cash flow-generating operations.
As consolidation looms on the horizon, the trajectory will depend on market evolution. Will Owens from Galaxy Digital remarked that treasury firms are entering a “Darwinian phase,” where only the fittest will survive. He indicated that a resurgence in Bitcoin prices could potentially revitalize the sector, although the expectations for success have risen significantly.
Emerging entities like Twenty One Capital (XXI), which is backed by Tether and SoftBank, are attempting to navigate this challenging environment. On its debut trading day, the firm experienced a 19% drop. CEO Jack Mallers has emphasized that their approach differs from others, focusing on building sustainable cash flows and products rather than merely riding the wave of token ownership.
The ongoing crypto winter continues to reshape the landscape, presenting both challenges and opportunities for firms navigating these turbulent waters.
