Bitcoin treasuries, which are firms that hold substantial amounts of Bitcoin on their balance sheets, have seen their momentum come to a halt, with purchases in October reaching their lowest level of any month this year. To date, these treasuries have amassed over 1 million Bitcoin, but the recent numbers indicate a notable decline in traction. Public companies added only 14,400 Bitcoin, valued at approximately $1.4 billion, to their assets in October. This represents a staggering 63% decrease from September’s acquisition of 38,035 Bitcoin, as documented by data from BitcoinTreasuries.net. In comparison, private enterprises introduced even less, with just about 3.5 Bitcoin added during the same period.
The downturn in Bitcoin treasury acquisition correlates with a significant decline in the premium that previously made these treasures appealing to investors. The market capitalization to Bitcoin holdings ratio, referred to as strategy’s mNAV, plummeted to 1.1x, a marked decrease from 1.8x recorded in May. Such figures pose difficulties for key players in the sector, particularly Strategy, which has struggled alongside its peers. Asian titan MetaPlanet reported a loss of $30 million on its Bitcoin investments, while France-based Sequans Communications liquidated 970 Bitcoin in an attempt to recover from a downturn in its stock value.
Several factors contribute to this dramatic slowdown. Firstly, the collapse of mNAV is critical. The underlying principle that fueled the previous Bitcoin treasury boom was the potential premium over Bitcoin holdings. Investors were willing to pay as much as 6x the intrinsic Bitcoin value just for access to stock market benefits. However, that premium has largely dissipated. With Strategy’s mNAV dwindling to 1.1x and BitMine—the largest Ethereum treasury—trading below its cryptocurrency holdings, the premise of issuing shares to acquire more Bitcoin without diluting existing shareholders has unraveled.
Additionally, a saturation of the market with new entrants has further complicated the landscape. The number of public companies holding Bitcoin surged to over 200 in 2024 from merely a handful in 2020, reflecting a “me too” phenomenon. October alone witnessed the emergence of 26 new Bitcoin treasury firms, as concerns regarding the sustainability of these rapid expansions grew.
Market conditions for some companies have worsened dramatically. Nakamoto Holdings, under David Bailey, saw a meteoric rise to $35 per share following a merger in May, only to collapse below $1. Strategy’s own share price has plummeted 46% from its peak in July, while Sequans Communications faced delisting difficulties stemming from its depreciated stock value.
Another crucial aspect in this downturn is Bitcoin’s soaring price, now exceeding $100,000 per coin. Acquiring Bitcoin in significant amounts demands far larger capital raises than before, making it challenging for companies to maintain their purchasing power. Consequently, some firms are resorting to selling their Bitcoin to stabilize their stocks. Sequans Communications sold off 970 Bitcoin to settle convertible debt, while ETHZilla offloaded $40 million in Ether for similar reasons. MetaPlanet has even disclosed plans to borrow up to $500 million against its Bitcoin holdings to buy back shares.
The evolving dynamics of the Bitcoin treasury landscape illustrate a significant shift from rapid expansion to cautious reevaluation, as firms grapple with declining premiums, market saturation, and rising asset prices.
