Crypto Treasuries Face Mounting Pressure as Market Downturn Undermines Balance Sheets
The ongoing crypto downturn has left a significant mark on digital asset treasury firms, highlighting the fragility of a business model based on holding volatile crypto assets on corporate balance sheets. As the value of cryptocurrencies such as Bitcoin and Ether continues to decline, companies that have invested heavily in these assets are facing significant losses.
Evernorth Faces $78 Million Unrealized Loss Amid Mounting Pressure on Treasury Firms
A recent analysis by on-chain data firm CryptoQuant has highlighted the pressures faced by digital asset treasury companies, citing Evernorth, an XRP-focused treasury, as a key example. The company reportedly suffered $78 million in unrealized losses on its XRP position just weeks after acquiring the tokens. Even established giants like MicroStrategy (MSTR), the original Bitcoin treasury company, have been hit hard, with its stock falling 26% over the past month due to Bitcoin’s decline.
The pain is not just limited to Bitcoin treasuries. BitMine, the largest Ether holding company, is currently sitting on around $2.1 billion in unrealized losses related to its 3.4 million ETH holdings. The company acquired over 565,000 ETH last month alone, increasing its exposure to Ethereum price fluctuations. According to Google Finance, MicroStrategy’s stock is now trading more than 50% below its all-time high.
Novogratz Says Treasury Crypto Boom Has Peaked
Galaxy Digital CEO Michael Novogratz believes the wave of new crypto treasury companies has likely peaked, and attention is now shifting to which existing companies can scale and dominate. During Galaxy’s second-quarter earnings conference call, he said, “We’ve probably gone through the peak of treasury issuance,” suggesting a more competitive period lies ahead. The boom in Treasury-based crypto firms has been fueled by favorable U.S. regulations, with companies such as MicroStrategy, GameStop, Trump Media, and SharpLink providing reserves for Bitcoin, Ethereum, and other digital assets.
However, Novogratz warned that saturation could make it harder for new entrants to gain a foothold, especially as Ethereum-focused treasuries like BitMine and SharpLink continue to expand. According to a new report from 10x Research, retail investors pursuing Bitcoin exposure through publicly traded companies such as Metaplanet and Michael Saylor’s MicroStrategy have lost an estimated $17 billion. The company said the losses were due to equity premiums that once valued these companies well above the value of their Bitcoin holdings, premiums that have now evaporated.
For more information on the impact of the crypto market downturn on digital asset treasury firms, visit https://cryptonews.com/news/crypto-treasuries-take-a-hit-as-month-long-market-slump-erodes-balance-sheets/
