According to a recent analysis from Galaxy Research, Bitcoin treasury companies are now undergoing a “Darwinian phase” as the foundational elements of their previously successful business models disintegrate.
The report indicates that the digital asset treasury (DAT) trade has reached its natural limit, with equity prices falling below Bitcoin (BTC) net asset value (NAV). This has caused a reversal of the growth loop driven by issuance, leading to leverage becoming a liability.
This turning point occurred as Bitcoin descended from its October peak of nearly $126,000 to lows of around $80,000, triggering a significant decrease in risk appetite and draining liquidity throughout the market. The event on October 10, which involved deleveraging, hastened this transition, eradicating open interest in futures markets and diminishing spot depth.
“The shift has been intense for treasury companies whose equities had been utilized as leveraged crypto trades,” Galaxy noted, emphasizing that the same financial engineering that amplified gains has also intensified losses.
Related: Cantor reduces Strategy target by 60%, dismissing forced-sale concerns as exaggerated
DAT stocks shift to discounts
Stocks in the DAT sector that once traded at significant premiums to NAV during the summer are now primarily trading at discounts, despite Bitcoin’s decline being only about 30% from its highs. Companies like Metaplanet and Nakamoto, which previously showcased hundreds of millions in unrealized gains, are now facing substantial losses as average BTC purchase prices exceed $107,000.
Galaxy noted that the leverage amassed by these companies exposes them to severe downside risks, with one firm, NAKA, experiencing a drop of over 98% from its peak. “This price action mirrors the kinds of wipeouts seen in memecoin markets,” the firm stated.
With the issuance path closed off, Galaxy outlined three potential scenarios moving forward. The base case entails an extended period of compressed premiums, during which BTC-per-share growth stagnates and DAT equities present greater downside risk than Bitcoin itself.
The second scenario involves consolidation, where companies that heavily issued at high premiums, purchased BTC close to the peak, or accrued significant debt may face solvency issues, leading to acquisitions or restructurings. A third possible outcome allows for recovery if Bitcoin achieves new all-time highs, but only for those companies that maintain liquidity and refrained from excessive issuing during the boom.
Related: Can the largest Bitcoin whales truly dictate when the market shifts from green to red?
Strategy raises $1.44 billion to ease dividend concerns
On Friday, Strategy CEO Phong Le announced that the company’s new $1.44 billion cash reserve was established to alleviate investor concerns regarding its capability to meet dividend and debt commitments amid Bitcoin’s downturn. This reserve, generated through a stock sale, aims to ensure at least 12 months of dividend payments, with plans to extend this buffer to 24 months.
Meanwhile, Matt Hougan, chief investment officer at Bitwise, stated that Strategy will not be compelled to sell Bitcoin to remain solvent if its share price drops, asserting that those who claim otherwise are “simply incorrect.”
Magazine: 2026 is set to be the year of pragmatic privacy in crypto — Canton, Zcash, and more
