Bitcoin treasury companies are entering a “Darwinian phase” as the mechanics that powered their boom have broken down, Galaxy Research says. The firm’s analysis argues the digital asset treasury (DAT) trade has hit a natural limit after equity prices fell below Bitcoin (BTC) net asset value (NAV), reversing the issuance-driven growth loop and turning leverage into a liability.
The turning point came as Bitcoin slid from an October peak near $126,000 to about $80,000, triggering a sharp drop in risk appetite and a liquidity drain across markets. An October 10 deleveraging event accelerated the shift, wiping out futures open interest and weakening spot market depth. Galaxy noted that for treasury companies whose equities effectively acted as leveraged crypto exposure, the same financial engineering that amplified upside has magnified downside.
DAT stocks that traded at rich premiums over the summer are now mostly at discounts, even though Bitcoin is only down roughly 30% from its highs. Firms such as Metaplanet and Nakamoto—which once showed hundreds of millions in unrealized gains—are now deep in the red, with average BTC purchase prices above $107,000. Leverage has exposed extreme downside: one firm, NAKA, plunged more than 98% from its peak. Galaxy compared the price action to the wipeouts seen in memecoin markets. (Galaxy’s chart showed Metaplanet’s unrealized PnL reaching about $530 million at peak.)
With issuance no longer an easy source of funding or growth, Galaxy outlined three potential paths forward:
– Base case: prolonged compressed premiums, with BTC-per-share growth stagnating and DAT equities offering more downside than owning Bitcoin directly.
– Consolidation: heavily issuing firms, those that bought BTC near the top, or highly indebted companies face solvency pressure and may be acquired, restructured, or fail.
– Recovery: possible only if Bitcoin reaches new all-time highs and for companies that preserved liquidity and avoided over-issuing during the boom.
In related corporate moves, Strategy announced a $1.44 billion cash reserve intended to calm investor concerns about dividend and debt obligations during the downturn. Funded through a stock sale, the reserve is designed to cover at least 12 months of dividend payments, with plans to extend the buffer to 24 months. Bitwise CIO Matt Hougan said Strategy would not be forced to sell Bitcoin to stay afloat if its share price falls, calling contrary claims “just flat wrong.”
