James Butterfill from CoinShares has addressed one of today’s most debated subjects. Concerns have arisen that due to Strategy’s MNAV approaching 1, the company might begin selling its 650,000 BTC reserves. This could ignite one of the largest bear markets for cryptocurrencies. Are crypto reserve companies facing collapse?
Crypto Reserve Companies
Known by the acronym DAT, Digital Asset Treasury refers to companies that accumulate digital assets on their balance sheets. Over the last two years, DAT companies have increased their market share among crypto investors, making long-term purchases and avoiding panic selling.
The growth of DATs is vital for the continued stable rise of cryptocurrencies. When Strategy announced its treasury management strategy in August 2020, it declared its intention to accumulate BTC. Since then, hundreds of companies have emulated its “strategy.” Companies holding more than 40% of their balance sheets in cryptocurrencies are called DATs.
The DAT strategy enables companies, which previously suffered losses in other ventures but are listed on stock exchanges, to profit with crypto. For instance, BitMine, the largest ETH reserve company, initially had just a $5 million operating income, but today holds over $10 billion in BTC. Similarly, Japanese-based Metaplanet, before holding BTC, had stagnating shares, yet now boasts a $2.7 billion valuation.
Are Companies Facing Collapse?
Crypto reserve companies finance themselves through stock issuance. Strategy, for example, has $8.2 billion in outstanding debt and $7 billion in dividend-yielding preferred stocks. Strategy’s liabilities amount to roughly $800 million annually. To mitigate bankruptcy fears, Saylor’s company recently issued $1.4 billion to cover preferred dividends and coupon payments, ensuring a cash reserve.
The most crucial DAT potential bankruptcy is Strategy. While others are manageable for the market, Strategy holds a substantial reserve to prevent its collapse. Recall the MTGOX crash; the market risks a collapse three to four times its size due to Strategy’s vast reserve. The company holds nearly a two-year cash reserve against its $800 million annual cost, diminishing its bankruptcy risk significantly.
What happens if MNAV drops below 1? The company could use its cash reserves or sell some BTC to buy back shares. However, selling 650,000 BTC isn’t necessary as their liabilities are far less, making bankruptcy unlikely for Strategy.
Above, the MNAV status of the top 10 crypto reserve companies is shown, with most averaging below 1, while Strategy remains on the borderline. (Source: CoinShares)
In the summer of 2025, many of these companies traded at values 3, 5, or even 10 times their MNAV. Today, Strategy stands around 1.1, while some DATs fall below 1. Cryptocurrencies need to bounce back to prevent these companies from falling into further distress. Strategy considers lending BTC to cope with tough times and strengthen its position, potentially bringing in cash exceeding $2 billion annually.
In conclusion, the crypto reserve company bubble hasn’t burst yet. Risks haven’t reached alarming levels, and the companies stay afloat. However, nearly a year ago, before MSTR shares hit their ATH, I predicted that future bear markets might be triggered by the reserve company bubble bursting or facing heavy blows. While it may not happen now, we might see disruptive results for these companies as BTC growth slows in the future. This mirrors the 2021 VC craze and could preview tomorrow’s VC failures from the 2022 crash.
