The allure of Bitcoin as a corporate treasury asset has dimmed for some companies, as their stock performance has failed to keep pace with their crypto ambitions. While the strategy of holding Bitcoin on the balance sheet gained traction after Strategy (formerly MicroStrategy) pioneered the approach in August 2020, not all firms have seen the same success. As of August 29, 2025, 161 publicly traded companies each hold more than 1 BTC, amassing a total of 989,926 BTC, which accounts for about 4.7% of Bitcoin's supply.
The Cooling Effect
The initial enthusiasm surrounding Bitcoin treasury strategies has waned. Announcing a BTC strategy is no longer a surefire way to boost a company's share price. Some firms have shifted towards diversifying into Ether, while others have witnessed their shares trading back to, or even below, pre-announcement levels.
Companies Experiencing Setbacks
Several companies have seen their stock performance struggle despite their Bitcoin holdings. GameStop, for instance, holds 4,710 BTC, and its fate has been intertwined with Bitcoin and crypto. While the company experienced a short squeeze in 2021 driven by retail traders, its Bitcoin rally pales in comparison.
The "Death Spiral" Fear
Venture firm Breed has warned that many BTC treasury firms may not survive the next market downturn unless they maintain trading well above their net asset value (NAV). A significant drop in Bitcoin prices could trigger a "death spiral" for these companies. If Bitcoin experiences a sharp decline, the market-to-NAV (MNAV) premium for these firms would shrink, making investors less inclined to pay extra for shares backed by a falling asset. This could lead to a drying up of fresh capital through equity placements or convertible debt, which is crucial for these businesses. As loans mature, lenders could call in margins and force sales, further depressing Bitcoin prices and creating a vicious cycle.
Factors Contributing to Underperformance
Several factors contribute to the underperformance of some Bitcoin treasury firms. Many newcomers lack the leverage, investor base, and track record of Strategy Chair Michael Saylor. A sub-one mNAV means increased debt loads, dilution risk, and credibility issues that are dragging valuations lower. Some Bitcoin treasuries have little beyond their crypto stash, with some even abandoning their core businesses to go all-in on crypto. The market may also lack confidence in unproven leadership, and newer digital asset firms may struggle to maintain investor interest.
The Broader Market Impact
The struggles of Bitcoin treasury firms can have a ripple effect on the broader crypto market. If a significant number of these firms fail, it could lead to a loss of confidence among investors, further exacerbating the downward trend. This scenario could result in a prolonged bear market, with far-reaching consequences for the entire crypto ecosystem.
The Importance of Risk Management
The firms that are likely to survive this potential crisis are those with robust risk management strategies and sufficient reserves to weather the storm. They must maintain a rising Bitcoin-per-share value even in flat markets, communicate clearly with investors, and avoid unsustainable leverage.
Current Market Conditions
As of August 29, 2025, Bitcoin's price has fallen 11% from its all-time high, reaching a value of $112,286.88. Ethereum's price has also been hit hard, trading at around $4,300, which is 12% below its record. This has led to over $410 million in liquidations in the crypto market.
Looking Ahead
The Bitcoin treasury playbook is not a guaranteed path to success, and companies must carefully consider the risks involved. As the market matures, investors are becoming more discerning, and only those firms with strong fundamentals and sound risk management practices are likely to thrive.
