The Great Crypto Treasury Unraveling
The once-booming cryptocurrency treasury trade, which dominated investment strategies for much of 2025, has dramatically collapsed as bitcoin and ether prices tumble. What was considered the year's hottest investment move has turned ice-cold, leaving investors divided between those saying "I told you so" and others doubling down on their bets.
From Boom to Bust: The Numbers Tell the Story
The strategy that transformed ordinary companies into cryptocurrency powerhouses is now showing severe cracks. Michael Saylor's MicroStrategy, now rebranded as Strategy, exemplifies the dramatic reversal. The company reached a staggering $128 billion valuation at its peak in July but has since seen that value plummet to approximately $70 billion - a massive $58 billion evaporation.
The selloff isn't limited to Strategy alone. Companies that followed Saylor's blueprint are experiencing similar downturns. BitMine Immersion Technologies, a major ether-treasury company backed by venture capitalist Peter Thiel and managed by Wall Street veteran Tom Lee, has dropped more than 30% in the past month. Similarly, ETHZilla, which transformed from a biotech firm into an ether treasury with Thiel as an investor, has fallen 23% over the same period.
What Drove the Crypto Treasury Craze - And Its Collapse
The crypto treasury model gained popularity as companies discovered they could sell shares or borrow money to purchase cryptocurrencies like bitcoin and ether. Investors enthusiastically bid up these companies' stock prices, viewing them as leveraged plays on the volatile crypto market.
The rally was primarily fueled by the crypto-friendly Trump administration, which created favorable conditions for digital assets throughout most of the year. However, the bullish run came to an abrupt halt on October 10, when President Trump's surprise tariff announcement against China triggered widespread market selling.
Additional pressure came from a record-long government shutdown and uncertainty surrounding Federal Reserve monetary policy, creating a perfect storm that pushed bitcoin prices down by 15% in the past month.
Matthew Tuttle, whose MSTU ETF aims for double Strategy's returns, explained the amplified impact: "Digital asset treasury companies are basically leveraged crypto assets, so when crypto falls, they will fall more." His fund has experienced a 50% decline during the recent downturn.
Investor Reactions: From Confidence to Concern
The current situation has exposed fundamental concerns about the crypto treasury business model. Brent Donnelly, President of Spectra Markets, expressed skepticism that many investors shared privately: "The whole concept makes no sense to me. You are just paying $2 for a one-dollar bill. Eventually those premiums will compress."
Despite the downturn, some investors remain committed to their positions. Cole Grinde, a 29-year-old investor from Seattle, purchased approximately $100,000 worth of BitMine stock at $45 per share and has lost about $10,000 so far. Remarkably, the beverage-industry salesman continues to increase his stake while selling options to offset losses.
Grinde attributes his ongoing confidence to "the growing popularity of the Ethereum blockchain and Tom Lee's influence," noting that Lee's "network and his pizzazz have helped the stock skyrocket since he took over."
The Road Ahead for Crypto Treasury Companies
Analysts suggest that companies facing losses will find it challenging to sell new shares to purchase additional cryptocurrencies, potentially creating further downward pressure on crypto prices while raising fundamental questions about these business models.
Matt Cole, CEO of Strive, another bitcoin-treasury company, summarized the predicament many firms now face: "A lot of them are stuck." Strive itself has seen shares tumble 28% in the past month after raising money earlier this year to buy bitcoin at prices more than 10% above current levels.
However, Cole maintains that his company is better positioned than others to "ride out the volatility" because it recently raised capital through preferred shares rather than debt.
Michael Saylor, the pioneer of the crypto treasury movement, remains characteristically bullish despite the market turmoil. He has taken to social media to declare that "bitcoin is on sale," reflecting the divided sentiment that continues to characterize this volatile sector of the financial markets.
