Bitcoin Treasury Firms Hit Rock Bottom: Premiums Crumble as ‘Darwinian Phase’ Begins

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Ah, Bitcoin treasury firms-once the darlings of a digital gold rush-now face what Galaxy Research’s latest study calls a “Darwinian phase.” The core mechanics of these once high-flying business models are as broken as a fragile glass slipper at a rock concert. The digital asset treasury (DAT) trade, as it turns out, has hit its natural limit, much like a balloon finally popping after too many enthusiastic breaths. It seems the fate of these firms was sealed when equity prices fell beneath Bitcoin’s (BTC) net asset value (NAV), causing their lucrative “issuance-driven growth loop” to turn on them, like a boomerang thrown by an angry kangaroo. And let’s not forget how the leverage that once made them kings of the crypto world has now become their Achilles’ heel. Oops.

The breaking point? Well, when Bitcoin plunged from its October peak near $126,000 to a much humbler low of around $80,000, risk appetite shriveled up like a raisin in the sun. Liquidity evaporated across the market, triggering a harsh contraction. The October 10 deleveraging event didn’t help either, accelerating the chaos by wiping out open interest in futures markets and weakening spot depth. Not quite the fairy tale ending these firms had in mind, right?

“For treasury companies whose equities had been serving as leveraged crypto trades, the shift has been… intense,” Galaxy sighed, adding that the “same financial engineering that amplified upside has now magnified the downside.” Classic tale of ‘What goes up must crash spectacularly.’

DAT Stocks Flip to Discounts

Oh, the irony. DAT stocks, which traded at sky-high premiums over the summer, are now languishing in discount territory. And Bitcoin itself is only down about 30% from its highs-so, what happened here? Companies like Metaplanet and Nakamoto, once boasting unrealized gains in the hundreds of millions, are now steeped in the red, with average BTC purchase prices sitting comfortably above $107,000. A cozy little disaster, wouldn’t you say?

Galaxy couldn’t help but note the leverage embedded in these firms was akin to a booby trap-now revealing an extreme downside. One poor soul, NAKA, has plunged a whopping 98% from its peak. “This price action looks like the kind of wipeouts you see in the meme-coin markets,” the firm quipped. Ouch, that’s gotta sting. 😂

Now that issuance is no longer an option, Galaxy has outlined three potential paths ahead, each as exciting as a drive through a thunderstorm. First, the base case is a prolonged period of compressed premiums, where BTC-per-share growth stagnates, and DAT equities may offer more downside than Bitcoin itself. What a joy.

The second possible outcome? Consolidation. Those firms that heavily issued at high premiums, bought BTC near the peak, or piled on debt may find themselves facing solvency pressure. Cue the restructuring, or worse-acquisitions by the big fish. Nothing says ‘reality check’ like getting bought out.

And then there’s the third, the sliver of hope, if Bitcoin manages to reach new all-time highs. But that’s only if these companies managed to preserve some liquidity and avoided over-issuing during the boom. It’s a long shot. Get your popcorn ready, folks.

Strategy Raises $1.44 Billion to Quell Dividend Fears

In an attempt to calm the nerves of investors and prevent a full-scale panic, Strategy’s CEO Phong Le announced that the company had raised $1.44 billion in cash reserves. This is to ensure they can meet dividend and debt obligations during Bitcoin’s nosedive. Funded by a stock sale, this reserve is meant to secure at least 12 months of dividend payments-though, in typical corporate fashion, they’re planning to stretch that buffer to 24 months. Let’s see how long that lasts, eh?

Meanwhile, Bitwise’s CIO Matt Hougan has assured everyone that Strategy won’t be forced to sell Bitcoin just to stay afloat if its share price takes a dive. Anyone who says otherwise, according to Hougan, is “just flat wrong.” Ah, the sweet sound of corporate bravado. 🎩

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2025-12-06 11:22