The recent downturn in the cryptocurrency market has severely impacted digital asset treasury stocks, leading to significant declines as both Bitcoin and Ether experience notable drops. This year has marked a harsh reality check for many public companies that had eagerly embraced holding cryptocurrencies on their balance sheets, a trend that gained momentum during the Bitcoin rally in early 2025.
Under the previous administration, enthusiasm surged as more than 180 public companies ventured into cryptocurrency holdings. However, this excitement has been dampened as Bitcoin”s value fell sharply in October, prompting many firms to enter survival mode. Companies like Strategy, which had followed a debt-fueled investment model pioneered by Michael Saylor, are now contending with unrealized losses and dwindling stock prices.
Since October 10, Strategy”s stock price has plummeted by approximately 40%. Other firms, such as KindlyMD (NAKA) and American Bitcoin (ABTC), have also faced steep declines of 39% and 60%, respectively. ProCap Financial (BRR) has seen an even more significant drop of 65%. Ether-focused companies like Bitmine Immersion Technologies (BMNR), led by Tom Lee, have not escaped the downturn, with losses exceeding 33% as Ether”s price fell more than 25% during the same period.
Investors are increasingly focused on the metric known as market-adjusted net asset value (mNAV), which assesses a company”s market cap relative to its cryptocurrency holdings. A mNAV falling below 1 indicates that the market values the company less than the worth of its crypto assets. Recently, Strategy”s mNAV approached 1x, raising alarms that it might need to liquidate Bitcoin assets to maintain dividend payouts and manage debt obligations. In response, Strategy announced a cash reserve of $1.44 billion, aiming to sustain its payouts for up to 21 months amidst ongoing market volatility.
Analysts from Bernstein believe that while Strategy can weather the current crypto winter, many imitator firms may struggle to maintain their positions. Gautam Chhugani highlighted that concerns regarding Strategy might be overstated, yet he warned that numerous followers might continue to trade below their NAV without clear pathways to long-term capital.
A report from Bitcoin Treasuries reveals that 100 bitcoin treasury firms have a measurable cost basis, with 65 of them having purchased Bitcoin at prices higher than current market levels. During the recent sell-off, these firms collectively sold 1,883 bitcoins. Hivemind Capital”s Matt Zhang noted that only a select few of the 100 DATs have attracted investment from his team, predicting that many may become irrelevant as the market matures.
Comparing the current scenario to the dot-com bubble of 2000, Zhang emphasized the need for these companies to establish viable business models beyond merely holding tokens. He expressed optimism that every S&P 500 company might eventually hold Bitcoin and Ether as a form of value preservation, but stressed the necessity of operational business strategies to support such treasuries.
Will Owens from Galaxy Digital remarked that treasury companies are entering a “Darwinian phase” where only the fittest will survive. He noted that a resurgence in Bitcoin”s price could provide a lifeline for some companies, although the threshold for success has undoubtedly risen.
A new entrant in this challenging landscape is Twenty One Capital (XXI), supported by Tether and SoftBank. Despite a 19% decline on its first trading day, CEO Jack Mallers has asserted that the firm is focused on building cash flows and sustainable business models, distinguishing itself from both Strategy and Coinbase. Mallers underscored that the market will take time to understand the company”s value proposition.
As the digital asset treasury sector grapples with its current challenges, the future remains uncertain, with consolidation and restructuring likely on the horizon for weaker firms.
