What began as a promising strategy for public companies leveraging their cash reserves to invest in Bitcoin and other digital assets has turned into a disheartening trend for many. Initially embraced as a lucrative venture, the approach — first popularized by Michael Saylor, the CEO of Strategy Inc. — involved using corporate funds to acquire digital tokens, which in turn reportedly boosted share prices significantly.
As the year progressed, more than a hundred companies joined the fray, becoming known as digital asset treasuries (DATs). During the first half of 2025, this movement gained remarkable traction; notable figures, including Peter Thiel and members of the Trump family, anticipated massive returns. One striking example was SharpLink Gaming Inc., whose stock soared over 2,600% after announcing its pivot from gaming to a substantial investment in Ethereum, with one of the cryptocurrency’s co-founders taking the helm as chairman.
Yet as time passed, the justification for these soaring valuations became increasingly tenuous. For example, SharpLink’s stock plummeted by 86%, now valued lower than its Ethereum holdings. The company’s market capitalization has dipped to around 0.9 times its token assets. In an even steeper decline, Greenlane Holdings saw its shares drop by over 99%, despite holding approximately $48 million in BERA tokens.
This shift reflects a growing investor realization that merely holding digital assets does not generate yields, undermining the earlier optimism surrounding these investments. According to data from Bloomberg, the median stock price among US and Canadian-listed DATs has decreased by 43% so far this year, while Bitcoin itself has experienced a more modest decline of about 6%.
Though some DATs maintain valuations above their token holdings, the majority have not fared well, with about 70% projected to close the year lower than where they began. Companies that opted for smaller, more volatile cryptocurrencies have been particularly hard-hit. For instance, shares in Alt5 Sigma Corp., which attracted financial backing from two of Donald Trump’s sons, have also dropped approximately 86% since their peak in June.
The volatility in this sector can, in part, be attributed to the extensive borrowing undertaken to finance these corporate crypto acquisitions. Strategy itself employed a diverse array of financial instruments, including convertible bonds and preferred shares, to fund its Bitcoin purchases—a strategy that at one point brought its crypto assets to a staggering valuation of over $70 billion. Collectively, DATs raised over $45 billion this year while acquiring digital tokens. However, these companies now confront the challenge of servicing the debt associated with those acquisitions, even as their crypto holdings yield no cash flow.
Michael Lebowitz, a portfolio manager at RIA Advisors, indicated that owning shares in these companies now equates to bearing both the risks of Bitcoin and those associated with the companies themselves. In recent attempts to raise additional capital, Strategy has turned to Europe, offering perpetual preferred stocks at a discount. Unfortunately, interest in these euro-denominated shares has faltered as well.
Meanwhile, DATs lacking brand recognition face even more significant hurdles, as declining crypto prices dampen investor enthusiasm. The fate of Strategy now hinges on whether it will need to liquidate some of its Bitcoin holdings to meet financial obligations, with CEO Phong Le acknowledging the possibility. This marks a stark contrast to Saylor’s earlier declarations to hold onto Bitcoin at all costs.
The broader market could be impacted if these companies are forced to sell their crypto assets to cover margin calls, potentially triggering a ripple effect that lowers token prices further. The fear within the industry is palpable, and analysts suggest that even a small sale by a company like Strategy might raise doubts about confidence in the Bitcoin investment thesis.
Adding to the complexities, Strategy has established a $1.4 billion reserve fund to manage short-term dividend obligations, though its stock is on track for a 38% decline this year, even as it remains significantly up since it began its Bitcoin purchases in August 2020.
The current turmoil has largely stifled the influx of new companies adopting the DAT strategy, effectively halting significant capital market activity. However, there are signs of potential mergers and acquisitions, as stronger DATs may begin acquiring those worth less than their underlying holdings. Recently, Strive Inc., co-founded by Vivek Ramaswamy, announced an all-stock deal to acquire Semler Scientific Inc., which has also encountered substantial stock depreciation this year.
Looking ahead, industry experts predict that mergers and acquisitions may ramp up in early 2026, as companies seek opportunities for survival amid challenging conditions. The focus will likely shift toward creating structured securities that could provide investors with better downside protection in ongoing and future transactions within the evolving landscape of digital asset investments.
