Bitcoin 
$91,081-focused treasury companies are seeing their business model entering a “Darwinian period,” as described by Galaxy Research in its latest analysis. The Digital Asset Treasury (DAT) strategy, once seen as a growth engine, has reached a critical inflection point due to changes in market dynamics. Bitcoin’s drop from $126,000 to $80,000 in October led to a sharp decline in risk appetite and rapidly diminishing liquidity in the sector.
Three Possible Paths: Consolidation, Stagnation, or Forced Waiting
According to Galaxy’s report, for a long time, the stocks of treasury companies traded at a premium over Bitcoin’s net asset value (NAV), functioning as a leveraged position on Bitcoin. However, as this structure began to collapse, the same financial engineering now exacerbates the downturn. Companies like Metaplanet and Nakamoto faced significant losses in BTC positions purchased at averages above $107,000. The drop of NAKA from its peak by 98% is likened to a “memecoin collapse” in the report.
Galaxy Research outlines three potential scenarios for the future of the DAT model. The first scenario, deemed most likely, suggests premiums will remain low, effectively freezing per-share BTC growth. Under this premise, DAT shares would carry higher risk than Bitcoin itself.
In the second scenario, consolidation emerges prominently. Companies that excessively issued shares at high premiums or purchased BTC at peak prices, inflating their balance sheets or accruing high debt burdens, may face solvency risks. This could lead to mergers, bankruptcy processes, or restructurings.
The third scenario offers a glimmer of hope with Bitcoin potentially reaching new highs again. However, this possibility is seen as viable only for companies maintaining liquidity, avoiding excessive issuance, and keeping their risks limited.
In parallel, another development impacting the crypto market this week was the U.S. crypto investment firm Marathon’s new capital raise plan. The company announced efforts to increase cash reserves to maintain operations through volatile periods, serving as a crucial signal that financial stress isn’t limited to a few players among DAT companies.
Strategy Company Establishes a $1.44 Billion Shield
On Friday, Strategy CEO Phong Le announced the establishment of a new $1.44 billion cash reserve aimed at assuaging investor concerns about dividend and debt servicing capacity. This reserve, financed through share issuance, aims to secure dividend payments for at least 12 months and later extend to 24 months. Bitwise CIO Matt Hougan commented that despite a drop in Strategy’s stock price, the company wouldn’t need to sell Bitcoin, stating that assumptions to the contrary are entirely incorrect.
In conclusion, the future of DAT companies is increasingly tied to a deeper structural transformation rather than merely Bitcoin’s price movements. If market stability is not regained and companies do not move towards more cautious capital management, the sustainability of the current model over the long term remains a significant question. However, for players with strong cash positions and adept risk management, this period could open new doors of opportunity.
