Key Insights
- •Bitcoin treasury companies entered a stress test phase as equity premiums to net asset value compressed sharply.
- •Strategy’s mNAV dipped below 1.0 on November 11 and sits at 0.886.
- •Galaxy Digital research outlined three potential paths forward for these firms.
The Bitcoin Treasury Model Faces a Harsh Reality
Bitcoin treasury companies faced a harsh reality in late 2025 as the financial engineering that had powered their meteoric rise began to work in reverse. A crypto news report by Galaxy Digital dissected the structural vulnerabilities that emerged once equity premiums to Bitcoin net asset value evaporated. This left firms unable to issue accretive shares, which forced a fundamental reassessment of the digital asset treasury model that had captivated markets earlier in the year.
Galaxy Research had warned in July 2025 that the Bitcoin treasury model functioned as a liquidity derivative, depending entirely on equity trading at a premium to underlying BTC holdings. The firm argued that once those premiums collapsed, the entire flywheel would reverse. This would transform the same mechanism that allowed companies to issue stock above net asset value and accumulate Bitcoin into a dilutive tax on shareholders. That exact scenario materialized in the fourth quarter, according to the latest Bitcoin news from Galaxy.
October Deleveraging Event Marks Inflection Point
The October 10 crash forced a liquidation cascade across perpetual futures markets, triggering a sharp decline in open interest and tightening liquidity across crypto markets. At the time, Bitcoin news saw the coin fall from approximately $126,000 in October to as low as $80,000, though it had rebounded to around $90,000 as of press time. The deleveraging event flushed leverage from the system, leaving liquidity conditions materially weaker heading into the fourth quarter and creating a hostile environment for high-beta Bitcoin treasury trades.
For digital asset treasury (DAT) companies whose equities had served as leveraged crypto trades, the shift proved intense. The feedback loop that sustained their business models reversed as lower Bitcoin prices compressed net asset values per share, squeezed equity premiums, and eliminated the ability to issue shares accretively. Investors began questioning whether some firms might eventually need to sell Bitcoin holdings to maintain operations.
Strategy (MSTR), the largest corporate Bitcoin holder globally, saw its multiple to net asset value dip below 1.0 on November 11 and remained underwater at 0.886 as of December 5, according to Bitcoin Treasuries data.
Metaplanet, known for aggressive accumulation and transparency, registered an mNAV of 1.015 earlier in the week, but had been oscillating around parity since mid-October. Kindly MD, which merged with Nakamoto Holdings and now trades as NAKA, experienced perhaps the most severe compression with an mNAV of 0.477 as of December 5, hovering near its all-time low of 0.417 registered on November 21.
Unrealized Losses Replace Paper Profits
The speed at which conditions deteriorated became evident in companies’ unrealized profit-and-loss positions. Metaplanet’s dashboard showed over $600 million in unrealized profits in early October when Bitcoin traded near $118,000. By December 1, that figure had swung to approximately $530 million in unrealized losses.
Metaplanet and Nakamoto both carried average Bitcoin costs above $107,000, placing their unrealized positions firmly in negative territory with Bitcoin trading around $92,000. Galaxy Research’s analysis assumed a Bitcoin price of $85,000 when calculating updated unrealized positions through December 1. That illustrates how quickly the margin of safety evaporated for firms that accumulated holdings at cycle-top prices.
The magnitude of drawdowns across Bitcoin DAT equities proved striking, with Nakamoto suffering a more than 98% decline in stock price. This resembles the wipeouts typically seen in memecoin markets rather than corporate equities.
Equity Premiums Evaporate Across the Board
Market capitalization premiums to Bitcoin net asset value compressed dramatically since July. Metaplanet had traded at 236% of its BTC NAV then. Galaxy Research calculated equity premiums using current market capitalization relative to Bitcoin NAV rather than enterprise value. It argued that treasury companies functioned primarily as asset-holding vehicles whose valuations stemmed from BTC-per-share exposure rather than cash flows.
The drawdowns extended far beyond Bitcoin’s own 30% decline from its highs. As Galaxy noted in its summer research, these treasury companies represented leveraged plays on Bitcoin exposure that combined operational, financial, and issuance leverage. That triple leverage delivered extraordinary outperformance during Bitcoin’s ascent and equally extraordinary underperformance during the reversal, with investors experiencing x+y percent declines when Bitcoin itself declined x percent.
Three Paths Forward for the Bitcoin Treasury Model
Galaxy Digital outlined three plausible outcomes that could emerge simultaneously across different firms, depending on balance sheet health and capital access. The first and base case assumed premiums would remain compressed as long as crypto markets stayed soft. That left Bitcoin per share stagnant or declining, and it forced digital asset treasury equities to offer levered downside rather than upside versus spot Bitcoin. The early 2025 regime, where equity beta exceeded Bitcoin beta, would not reappear without a full reset in risk appetite and Bitcoin making new highs.
The second path involved selective survival and consolidation, as the drawdown functioned as a balance sheet stress test. Firms that issued the most stock at the highest premiums, bought the most Bitcoin at cycle top prices, and layered debt against those holdings faced the greatest pressure. Prolonged discounts, combined with large unrealized losses, were likely to create solvency and governance pressures, leading to potential restructurings and acquisitions by stronger players. Strategy’s recent announcement of a $1.44 billion cash reserve, funded via at-the-market equity sales, signals an evolution in the model, as liquidity management became a strategic priority alongside pure Bitcoin accumulation.
The third path preserved optionality for the next cycle. The treasury company trade remained viable in principle if Bitcoin eventually printed new all-time highs. That allows a subset of companies to regain modest equity premiums and reopen the issuance flywheel. However, the bar appeared higher; boards and management teams would be judged on how they handled the stress test, including whether they over-issued into the cycle top and preserved optionality during the downturn.
Galaxy Research emphasized that Bitcoin treasury companies now resembled path-dependent instruments. Their payoffs depended heavily on issuance strategy and entry timing rather than simple leveraged upside plays on Bitcoin. The first phase of the Bitcoin treasury trade concluded not through a mysterious malfunction but by hitting the natural boundary condition. At this point, issuance shifted from a growth engine to a shareholder tax. Whether the model could adapt and survive the Darwinian phase ahead remained an open question as 2025 drew to a close.