Bitcoin Treasury Companies: From High-Flying Beta Trade to Darwinian Phase
The bitcoin treasury company (DAT) model, once a darling of crypto investors, has hit a wall. Remember those days when companies holding Bitcoin on their balance sheets traded at insane premiums? Those premiums have evaporated. Now, the question is: who survives the coming shakeout?
The basic premise of the DAT model was simple: companies issued equity, bought Bitcoin, and saw their stock price soar as investors piled in for leveraged exposure to BTC. This worked beautifully as long as the equity traded at a premium to its Bitcoin net asset value (NAV). Galaxy Research flagged this vulnerability months ago, warning that the party would end once premiums tightened and equity issuance became dilutive. And guess what? That's exactly what happened.
The Great Reversal
Bitcoin's price drop from around $126,000 in October to as low as $80,000 (before rebounding to the $90K range) triggered a massive deleveraging event. The macro environment turned risk-off, inflows to crypto ETFs slowed, and the speculative frenzy cooled. Companies like Strategy (MSTR), Metaplanet (3350.T), Semler Scientific (SMLR), and Nakamoto (NAKA)—each with a different profile in the DAT landscape—have seen their equity valuations plummet. Nakamoto, for instance, suffered a stock price drawdown exceeding 98%. Ouch.
These aren't just minor corrections; they're full-blown wipeouts reminiscent of memecoin implosions. And here's the kicker: the drawdowns are far more extreme than Bitcoin's own decline. While BTC is down roughly 30% from its highs, DAT equities have been hammered much harder. The triple leverage—operational, financial, and issuance—that amplified gains on the way up is now magnifying losses on the way down. I've seen this pattern play out in countless market cycles (parenthetical clarification: usually with less volatile assets), and it never ends well for the over-leveraged.
Unrealized Losses and Equity Premiums
The P&L swings are brutal. Metaplanet, which boasted over $600 million in unrealized profits in early October, is now showing approximately $530 million in unrealized losses as of December 1. And the equity premiums? Gone.
Let's look at Strategy, Metaplanet, and Semler Scientific. Their market-cap premiums to BTC NAV have steadily compressed since the beginning of 2025. In July, Metaplanet was trading at 236% of its BTC NAV. Today, those premiums are a distant memory.
The ability to issue shares above NAV and buy more BTC is now a liability. Investors are starting to wonder if some of these firms will be forced to sell their Bitcoin holdings to stay afloat. And this is the part of the report that I find genuinely puzzling: Why didn't these companies lock in some profits when they were sitting on massive gains? It defies basic risk management.
Darwinian Phase
So, what's next? DAT’s All, Folks? What’s Next for Bitcoin Treasury Companies outlines three plausible scenarios. First, premiums stay compressed (the most likely outcome). Second, we see selective survival and consolidation. Third, there's optionality on the next cycle.
I think the second scenario is the most interesting, because it highlights the impending balance-sheet stress test. Companies that issued the most stock at the highest premium, bought the most BTC at cycle-top prices, and layered on debt are in the most precarious position. Prolonged discounts and large unrealized losses will create solvency and governance pressures. Expect restructurings and acquisitions. The DAT space is about to enter a Darwinian phase.
Strategy's recent announcement of a $1.44 billion cash reserve (funded via ATM equity sales) is a clear signal that the company is preparing for a prolonged period of compressed premiums and weaker BTC prices. Liquidity management is becoming a strategic priority, not just pure BTC accumulation. The shift is that these companies now look less like simply “leveraged upside on BTC” plays and more like path-dependent instruments whose payoffs depend heavily on issuance strategy and entry timing.
A Cold, Hard Reality Check
The DAT model is vulnerable to premium collapses, regulatory changes, and capital market disruptions. As Galaxy Research put it, “Companies that rely too heavily on PIPEs or excessive leverage may suffer brutal drawdowns in less favorable market conditions.” The data doesn't lie: the high-flying beta trade is over, and the survivors will be those who adapt to the new reality.
The Tide Went Out
The market has a way of exposing those swimming naked.
