Bitcoin’s corporate treasury “infinite money glitch” has stalled.
For much of this market cycle, trading was simple: shares of companies holding Bitcoin were trading at a huge premium to the underlying net asset value (NAV).
This allowed companies to issue expensive shares to buy cheaper coins, thus increasing Bitcoin per share. It was a flywheel of financial engineering that depended on a crucial input: a persistent equity premium.
Why Bitcoin Treasury Company Premiums Evaporated
However, that contribution disappeared amid the recent Bitcoin price struggles.
Data from Glassnode shows that the price of BTC has fallen below the 0.75 quantile since mid-November, leaving more than a quarter of its circulating supply with an unrealized loss.
With this in mind, companies in the Bitcoin Digital Asset Treasury (DAT) basket, a sector with a market capitalization of approximately $68.3 billion, are down 27% over the past month and almost 41% in three months, according to data from Artemis.
In contrast, Bitcoin itself has lost approximately 13% and 16% during the same periods.
The “high beta” promise of these stocks has been maintained, but strictly to the downside. As a result, the mechanism has broken.
The premium to NAV, which once justified the aggressive issuance strategies of companies like MicroStrategy (now known as Strategy) and Metaplanet, has largely evaporated.
At the same time, most of the sector now trades near or below 1.0x “mNAV” (debt-adjusted market value).
When the premium turns into a discount, issuing shares to buy Bitcoin becomes value-destructive rather than value-accretive.
Therefore, for this sector to evolve from a basket of distressed indicators to a premium asset class, the market requires more than a simple price rebound. A structural repair is needed in prices, liquidity and governance.
Clear Subsea Cost Base
The first obstacle is purely mathematical. A reflexive bounce in Bitcoin price is insufficient to restart issuance engines as the cost base for newcomers to the sector is dangerously high.
Artemis data reveals a bifurcation in the market. While early adopters have profit cushions, the new wave of treasury companies is underwater.
Galaxy Research noted that several BTC DATs, including Metaplanet and Nakamoto (NAKA), aggressively built their positions, with average Bitcoin cost bases exceeding $107,000.
With spot prices currently languishing around $90,000, these companies are managing significant mark-to-market losses.
This creates a serious narrative obstacle.
When a treasure trades well above its cost base, the market treats it as a composite of capital managed by visionary allocators. When it trades below, the market treats it like a distressed holding company.
The leverage inherent in the model, which Galaxy identifies as pricing leverage, issuance leverage, and financial leverage, magnifies this pain.
Nakamoto, for example, has plunged more than 38% in one month and more than 83% in three months, behaving less like a structural representative and more like a struggling small cap.
For premiums to expand again, Bitcoin must not only recover; must maintain levels significantly above these high levels of $107,000. Only then can balance sheets be repaired enough to convince investors that “Bitcoin per share” is a growth asset rather than a liability requiring management.
The return of demand for leverage
The second requirement is a change in market psychology regarding leverage. The collapse of DAT valuations indicates that equity investors are currently rejecting “unsecured leverage.”
In its analysis, Galaxy framed the DAT sector as a native capital markets solution for high beta exposure. Basically, this is a way for funds to express a convex view on Bitcoin without touching the derivatives market.
However, in the current risk-averse environment, that convexity is working in reverse.
As long as ETF spot flows remain weak and perpetual futures open interest remains depressed, there will be limited appetite for additional leverage through equities.
In fact, CryptoQuant data shows that weekly average spot and futures volumes fell by another 204,000 BTC to around 320,000 BTC, a level consistent with down-cycle liquidity.
As a result, market rotation has stagnated and positioning has become defensive.
With this in mind, an institutional investor is mathematically better off holding a spot ETF like BlackRock’s IBIT if a DAT is trading at 0.9x NAV. This is because the ETF offers 1.0x exposure with lower fees, tighter spreads, and zero execution risk or corporate overhead.
Therefore, for the DAT premium to exist, the market must be in a “risk-on” mode, where investors actively seek out the volatility arbitrage offered by companies like MicroStrategy.
Artemis data confirms this “leveraged point” punishment. With MicroStrategy down roughly 30% over the past month, versus Bitcoin’s 13% drop, the market is pricing in the fragility of the model rather than its optionality.
For the premium to return, derivatives metrics such as funding rates and open interest must indicate a renewed risk appetite that standard ETFs cannot satisfy.
From offense to defense
The era of “print stocks, buy BTC” at any price is over. To regain investor confidence, corporate boards must shift from aggressive accumulation to focusing on defending balance sheets.
In early 2025, the market rewarded blind accumulation. Now it requires survival skills.
MicroStrategy’s recent decision to raise approximately $1.44 billion in cash reserves is a leading indicator of this regime change. This capital is intended to cover coupon and dividend commitments, effectively building a strong balance sheet capable of withstanding a prolonged bear market without forced selling.
This shift from “avoiding discounts” to “justifying premiums” is critical.
Industry experts had warned that the DAT model is vulnerable to premium collapse. Now that the crash is here, boards must demonstrate that future issuances will be disciplined and subject to clear value creation thresholds.
If investors believe that new capital will be deployed prudently, protecting the downside rather than chasing the top, the mNAV multiple may expand again.
Concentration and indexing
Finally, the market must deal with the overwhelming risk of concentration within the DAT sector.
Available data shows that MicroStrategy alone controls more than 80% of the Bitcoin held by the DAT sector and represents approximately 72% of the category’s total market capitalization.
This means that the fate of the entire asset class is inextricably linked to the specific liquidity dynamics and the status of the MicroStrategy index.
Furthermore, MSCI’s pending consultation on whether to restrict “digital asset treasury holdings” of major indices is the sword of Damocles hanging over trading.
If MicroStrategy maintains its index status, passive buying of funds that track the benchmark can mechanically re-inflate its premium, dragging the rest of the basket up.
However, if excluded, the mechanical supply disappears and the sector risks becoming a collection of closed-end funds that permanently trade at a discount to their underlying holdings.
