Crypto winter could spur ‘Darwinian phase’ for digital asset treasury companies
December 14, 2025
Digital asset treasuries were flying high this year until bitcoin’s sudden October crash. Now many of those companies are sitting on unrealized losses.
Over 180 public companies currently hold crypto on their balance sheets, with roughly 100 of that total having followed some version a the playbook that Strategy (MSTR) co-founder Michael Saylor pioneered in 2020 by issuing debt and equity to rapidly accumulate bitcoin.
The approach gained favor earlier this year when bitcoin prices were on the rise, with investors betting on bullish trends for crypto under the Trump administration.
But bitcoin’s more recent volatility has prompted a sell-off across the digital asset treasury (DAT) space.
Strategy’s stock has fallen roughly 40% since bitcoin’s Oct. 10 liquidation.
Investors have punished Strategy’s imitators even worse over the past month. KindlyMD (NAKA) has tumbled 39%. Eric Trump’s American Bitcoin (ABTC) is down 60%. Anthony Pompliano’s ProCap Financial (BRR) has fallen 65%.
Meanwhile, shares in treasury companies holding ether, the second-largest cryptocurrency, are down. Bitmine Immersion Technologies (BMNR), chaired by Fundstrat’s Tom Lee, is down more than 33% since October’s crypto sell-off as the token has fallen more than 25% in the same period.
Other ether-holding treasury companies, like sports betting company SharpLink Gaming (SBET) and computing firm Bit Digital (BTBT), have seen their stocks tumble about 40% over the past two months.
The key focus for these firms has been a ratio known as mNAV, which measures their market capitalization in relation to the value of crypto they hold on their balance sheets. An mNAV below 1 indicates that investors value a treasury company less than the crypto on its balance sheet.
In Strategy’s case, that metric inched toward 1x in late November, raising concerns that the company could eventually be forced to sell some of its bitcoin to pay out dividends and debt payments.
Read more: How to navigate a crypto meltdown
In response, earlier this month, the company announced a $1.44 billion cash reserve fund to sustain its hefty dividend payouts and interest on debt for the next 21 months, should bitcoin volatility persist.
Strategy CEO Phong Le has pushed back on the notion that a compressed mNAV in a bitcoin downturn poses a threat to the company’s business model.
He argues that Strategy is an operating company, not a passive fund like an ETF.
“Our products are bitcoin-backed securities,” Le said. ” In that particular case, the valuation of the company shouldn’t be equal to the underlying assets. The valuation of the company should be equal to the ability to grow the underlying assets, grow income, and grow the business.”
“We look much more like a ‘Mag 7’ tech stock than a closed-ended fund or an ETF,” Le added.
Strategy has made a similar argument to MSCI, challenging the index provider’s upcoming January decision on whether to exclude firms whose digital asset holdings represent 50% or more of total assets from global indexes.
Bernstein analysts believe Strategy will make it through the crypto winter just fine.
But many of the firms that copied Strategy’s playbook during the boom, buoyed by soaring token prices and crypto-friendly regulatory winds, may not.
“Market concerns on MSTR are overstated and there is no realistic scenario which threatens the longevity of MSTR,” analyst Gautam Chhugani wrote in a note on Dec. 1. “However, several MSTR copy-cats may continue to trade at discount to their NAVs without a clear path to raise long term capital.”
Out of the 100 bitcoin treasury companies with a measurable cost basis, 65 bought bitcoin above current market prices, according to a Thursday report from data aggregator Bitcoin Treasuries, leaving them with unrealized losses when the cryptocurrency plunged. Last month, while crypto’s rout kicked into higher gear, five of those firms sold 1,883 bitcoins.
Read more: Can you buy crypto with a credit card? See the pros and cons.
“I think you’ll see a lot of the DATs become irrelevant,” Hivemind Capital founder Matt Zhang told Yahoo Finance. Zhang said his investment firm evaluated more than 100 DATs this year and invested in just over a dozen.
“Just like the 2000 internet bubble, where many people stuck the dot-com on their business cards and hoped they’re going to make it, and they’re not, because the fundamental business model was flawed,” he added.
Zhang believes all S&P 500 (^GSPC) companies will eventually hold bitcoin and ether as a store of value and a treasury diversifier. But that alone won’t be enough.
“The question is what are you going to do beyond just that?” he said. “Are you supposed to have an operating business, and an operating business driving the cash flow that’s very much benefiting the cryptocurrency treasury you have?”
Zhang said he wouldn’t be surprised if consolidation takes place, but added, “It depends. I don’t think we should draw a conclusion against all of them.”
Restructuring and stronger players acquiring weaker ones are possibilities, according to Will Owens, a research analyst for Galaxy Digital.
“In other words, treasury companies are about to enter a Darwinian phase,” Owens wrote earlier this month.
The analyst said if and when bitcoin prints new all-time highs, it could be game on again for those who survive.
“In principal, the treasury company trade isn’t dead,” Owens wrote. “But the bar appears to be higher now.”
One newcomer attempting to clear that higher bar is Twenty One Capital (XXI), backed by heavyweights Tether and SoftBank (9434.T). The company saw its stock drop 19% during its public debut on Dec. 9. Its CEO, bitcoin influencer Jack Mallers, pushed back against the perception of a passive holding company and comparisons to prominent crypto players.
“People want to size us up like Strategy — we’re not,” he said. “We’re going to build cash flows, businesses, products,” Mallers told CNBC last week. “People size us up to a Coinbase. We’re not. We already own far more bitcoin than they do.”
“So the point is we’re different,” Mallers added. “And the market’s going to have to figure us out. And they can take as much time as they want.”
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
David Hollerith covers the financial sector, ranging from the country’s biggest banks to regional lenders, private equity firms, and the cryptocurrency space.
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