Bitcoin Treasury Firms Enter a 'Darwinian Phase' as Premiums Plummet: Galaxy Research

Bitcoin treasury firms enter a ‘Darwinian phase’ as premiums collapse: Galaxy

Bitcoin treasury firms are facing a challenging period described as a “Darwinian phase,” where the foundational elements of their previously thriving business model are deteriorating, as highlighted in a recent analysis by Galaxy Research.

Key Takeaways:

The digital asset treasury (DAT) market has hit its limits as equity values fell below Bitcoin's net asset value (NAV).
A significant drop in Bitcoin prices led to reduced risk appetite and market liquidity.
DAT stocks that once traded at premiums are now experiencing discounts.
Galaxy outlines three potential futures for these firms: stagnation, consolidation, or recovery depending on Bitcoin's performance.

The Breaking Point for DAT Firms

According to Galaxy’s report, the DAT trade has reached its zenith, with equity prices falling beneath Bitcoin's net asset value. This shift has reversed the growth cycle driven by issuance, turning leverage from an asset into a potential burden.

This pivotal moment occurred as Bitcoin's price declined from its October high close to $126,000 to lows nearing $80,000. This slump triggered a reduction in risk appetite and drained liquidity in the market. The October 10 deleveraging event further intensified these trends by reducing open interest in futures markets and diminishing spot market depth.

Galaxy pointed out that for treasury companies whose equities were leveraged as part of crypto trading, the transition has been severe. They noted, “the same financial engineering that enhanced profits has also amplified losses.”

Related: Cantor slashes Strategy target by 60%, tells clients forced-sale fears are overblown

Shift from Premiums to Discounts

DAT stocks, which previously traded at high premiums to their NAV during the summer, are now generally trading at discounts. Notably, Bitcoin has only decreased about 30% from its peak. Firms like Metaplanet and Nakamoto, which once reported millions in unrealized gains, are now showing significant losses, as their average Bitcoin purchase prices exceed $107,000.

Galaxy emphasized that the leverage inherent in these companies puts them at considerable risk, with one firm, NAKA, plummeting over 98% from its peak. “This price movement mirrors the kinds of collapses seen in memecoin markets,” the report indicated.

Metaplanet’s unrealized PnL reaches $530 million. Source: Galaxy

With issuance options dwindling, Galaxy outlined three potential paths forward. The first scenario involves a prolonged phase where premiums remain low, resulting in stagnation for BTC-per-share growth and increasing downside risks for DAT equities compared to Bitcoin itself.

The second possible outcome is a consolidation phase, where firms heavily leveraged at high premiums and those that over-invested in Bitcoin may face solvency challenges, leading to acquisitions or restructurings. The third scenario allows for a potential recovery if Bitcoin reaches new all-time highs, contingent on whether companies manage to maintain liquidity and refrain from over-issuing during the bull market.

Related: Can the biggest Bitcoin whales really decide when the market turns green or red?

Strategy Secures $1.44 Billion to Alleviate Investor Concerns

On Friday, Strategy's CEO Phong Le announced the establishment of a $1.44 billion cash reserve aimed at reassuring investors regarding its capacity to meet dividend and debt commitments amid Bitcoin's current downturn. This reserve, sourced from a stock sale, is intended to cover at least 12 months of dividends, with aspirations to extend this buffer for up to 24 months.

Conversely, Matt Hougan, the Chief Investment Officer at Bitwise, remarked that Strategy is not compelled to sell Bitcoin to remain viable in the event of a share price drop, contesting claims to the contrary as "simply incorrect."

Magazine: 2026 is the year of pragmatic privacy in crypto — Canton, Zcash, and more