"The 'crypto treasury' myth shattered? Stock and token prices plunge, companies forced to sell crypto assets."
The "crypto treasury" model, once considered a cutting-edge corporate strategy, is now rapidly losing its shine amid a cold market.
According to the Financial Times on November 26, as the cryptocurrency market suffers heavy losses, companies that once stockpiled digital assets to boost their treasuries are now facing the dual blow of falling stock prices and cryptocurrency prices. To support their continually declining stock prices, they are being forced to sell off their digital tokens.
According to data from The Block, these treasury companies—which mainly bought cryptocurrencies through debt and equity financing—have seen their market value evaporate by about $77 billion since reaching a peak of $176 billion in July.
This reversal stands in stark contrast to last year’s optimistic market sentiment after Trump promised to turn the US into the "crypto capital." Now, investors worry that a business model reliant on rising crypto prices and large-scale equity/debt financing is breaking the virtuous cycle it needs to survive.
The world’s largest corporate holder of bitcoin, MicroStrategy led by Michael Saylor, saw its stock price plunge 50% over the past three months—dragging down many imitators. The company's market capitalization is now even lower than the value of its bitcoin holdings, which has deepened market concerns.
Stock Prices Plunge, Market Value Below Asset Holdings
The failure of the "crypto treasury" strategy is most evident in stock prices. Besides MicroStrategy, Japan’s largest bitcoin holder, Metaplanet, has seen its share price plunge 80% since its June peak.
The UK’s largest bitcoin buyer, Smarter Web, also experienced a 44% drop in share price this year, with the company's valuation at 132 million pounds, while its bitcoin holdings are worth about $232 million.
Adam Morgan McCarthy, senior research analyst at crypto data company Kaiko, said: "These companies will see liquidation-style selling, and the situation will get worse. It’s a vicious cycle. Once prices start to plunge, it sets off a race to the bottom."
Jake Ostrovskis, head of OTC trading at Wintermute, also thinks the sell-off of digital asset treasury stocks is "inevitable" because "there are just too many of these companies."
Strategy Reversal—Selling Crypto Assets for Survival
Faced with a tough market, several companies have started to reverse their strategy, selling crypto assets to finance stock buybacks or pay down debt.
- North Carolina-based ether holder FG Nexus recently sold about $41.5 million in tokens to fund its stock buyback plan. The company’s market value is $104 million, less than the $116 million worth of crypto assets it holds.
- Florida's life sciences company ETHZilla also sold about $40 million in tokens for stock buybacks.
- French semiconductor firm Sequans Communications sold about $100 million in bitcoin this month to pay off debt. The company’s market value is $87 million, while its bitcoin holdings amount to $198 million. CEO Georges Karam called the sale “a tactical decision aimed at freeing up shareholder value under current market conditions.”
MicroStrategy Bucking the Trend
However, not all companies are backing down. As the pioneer of this strategy, MicroStrategy is bucking the trend. Despite bitcoin dropping from $115,000 a month ago to $87,000, the company is continuing to increase its holdings.
Founder Michael Saylor is unfazed by market concerns, saying this week: "Volatility is a gift from Satoshi to believers."
Nonetheless, analysts remain cautious about the market's future. Adam Morgan McCarthy warns that while bitcoin and ether holders can still find buyers, companies holding niche tokens will face greater difficulties raising funds.
He predicts: "When a medical device company buys niche assets in an obscure part of the crypto market, the outcome won’t be good," adding that 95% of digital asset treasuries “will go to zero.”
Meanwhile, MicroStrategy also faces the risk of being removed from some major stock indices, which could bring even greater selling pressure to its share price.
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