Introduction to Bitcoin Treasury Stocks
The “infinite money bug” of the Bitcoin company treasury has stalled. For much of this market cycle, trading was easy: shares of companies that held Bitcoin traded at a massive premium to the underlying net asset value (NAV). This allowed companies to spend expensive equity to buy cheaper coins, thereby positively increasing Bitcoin per share. It was a flywheel of financial engineering that relied on one crucial input: a sustained equity premium.
Why Bitcoin Treasury Company Premiums Have Disappeared
However, this input has been lost given Bitcoin’s recent price wars. Data from Glassnode shows that the price of BTC has slipped below the 0.75 quantile since mid-November, leaving more than a quarter of circulating supply in unrealized loss.
Bitcoin Price Risk Indicator (Source: Glassnode)
Against this backdrop, companies in the Bitcoin digital asset treasury (DAT) basket, a sector with a market capitalization of about $68.3 billion, are down 27% last month and nearly 41% in three months, according to Artemis data.
In contrast, Bitcoin itself has fallen by around 13% and 16%, respectively, over the same period. The “high beta” promise of these stocks has held up, although with a clearly negative trend. This caused the mechanism to break.
Clarification of the Underwater Cost Basis
The net asset value premium that once justified the aggressive underwriting strategies of companies like MicroStrategy (now Strategy) and Metaplanet has largely disappeared. At the same time, the majority of the sector is now trading near or below 1.0x mNAV (debt-adjusted market value).
If the premium turns into a discount, issuing shares to buy Bitcoin will have more of a value-damaging effect than a value-adding effect. For this sector to transform from a basket of distressed proxies back into a premium asset class, the market needs more than a simple price increase. A structural repair is needed in the areas of price, liquidity, and governance.
The first hurdle is purely mathematical. A knee-jerk rise in the price of Bitcoin is not enough to restart the emissions engines, as the cost base for the sector’s laggards is dangerously high.
The Return of Leverage Demand
The Artemis data shows a split in the market. While early adopters are sitting on profit cushions, the newer wave of treasury companies are underwater. Galaxy Research noted that several BTC DATs, including Metaplanet and Nakamoto (NAKA), aggressively increased their positions, with the average Bitcoin cost basis exceeding $107,000.
With spot prices currently remaining in the low $90,000 range, these companies are absorbing significant mark-to-market losses. Profit and Loss of Bitcoin Financial Companies (Source: Galaxy Digital)
This creates a strong narrative resistance. When a treasury trades significantly above its cost base, it is treated by the market as a capital broker managed by visionary allocators. If the stock trades below these levels, the market treats it as a distressed holding company.
From Offense to Defense
The era of “print stock, buy BTC” at any price is over. To regain investor confidence, corporate boards must shift from aggressive accumulation to a focus on defending the balance sheet. In early 2025, the market rewarded blind accumulation. Now survivability is required.
MicroStrategy’s recent move to raise approximately $1.44 billion in cash reserves is a leading indicator of this regime change. This capital is intended to cover coupon and dividend obligations, effectively building a solid balance sheet that can withstand an extended bear market without forced selling.
Concentration and Indexing
Finally, the market must address the overwhelming concentration risk within the DAT sector. Available data shows that MicroStrategy alone controls more than 80% of the Bitcoins held by the DAT sector and accounts for approximately 72% of the category’s total market capitalization.
This means that the fate of the entire asset class is inextricably linked to MicroStrategy’s specific liquidity dynamics and index status. Additionally, the upcoming MSCI consultation on whether to exclude “digital asset treasury companies” from major indices is a sword of Damocles hanging over trading.
For more information, visit https://cryptoslate.com/bitcoin-treasury-stocks-are-becoming-distressed-assets-as-a-107000-cost-basis-traps-late-entrants-underwater/
