Bitcoin treasury companies are entering a “Darwinian phase” as the foundation of their once-booming business model begins to unravel, according to a new report from Galaxy Research.
Galaxy argues that the digital asset treasury (DAT) trade has now hit its natural ceiling. As equity prices slip below the net asset value (NAV) of their underlying Bitcoin holdings, the issuance-driven growth cycle has reversed — turning what was once favorable leverage into a significant liability.
The breaking point came as Bitcoin fell from its October peak near $126,000 to lows around $80,000. The drop triggered a steep pullback in risk appetite, drained market liquidity, and set off a widespread unwinding of leverage. The October 10 deleveraging event accelerated the slide, erasing open interest in futures markets and weakening spot market depth.
“For treasury companies whose equities effectively functioned as leveraged crypto trades, the adjustment has been severe,” Galaxy noted. “The same financial engineering that amplified the upside has magnified the downside.”
DAT Stocks Slide Into Discounts
DAT equities that commanded hefty premiums to NAV over the summer are now trading at discounts, even though Bitcoin itself is down only about 30% from its highs. Firms like Metaplanet and Nakamoto — once sitting on hundreds of millions in unrealized gains — now face substantial losses, with their average Bitcoin purchase prices exceeding $107,000.
Galaxy added that the leverage built into these companies is exposing them to extreme downside risk. One firm, NAKA, has collapsed more than 98% from its peak. “This kind of price action resembles the wipeouts typically seen in memecoin markets,” the report said.
With issuance no longer a viable lever, Galaxy outlined three potential outcomes for DAT firms. The base-case scenario is a long stretch of compressed premiums, where BTC-per-share growth stalls and DAT equities continue to carry more downside risk than Bitcoin itself.
A second path involves consolidation. Companies that issued aggressively at high premiums, bought Bitcoin near market peaks, or took on excessive debt could face solvency challenges — making them candidates for acquisition or restructuring.
The third scenario allows for a recovery, but only if Bitcoin eventually reaches new all-time highs. Even then, only firms that maintained liquidity and avoided over-issuing during the boom would be positioned to benefit.
Strategy Raises $1.44B to Address Dividend Concerns
On Friday, Strategy CEO Phong Le announced that the company has built a $1.44 billion cash reserve aimed at reassuring investors about its ability to meet dividend and debt obligations through Bitcoin’s downturn. The reserve, funded through a stock offering, is designed to guarantee at least 12 months of dividend payments, with plans to extend that runway to 24 months.
Meanwhile, Bitwise CIO Matt Hougan said Strategy will not be forced to sell Bitcoin even if its share price falls, calling claims to the contrary “just flat wrong.”
