Strategy's $1.25B bitcoin plan exposes treasury sector stress
Strategy's authorization to sell up to $1.25 billion in bitcoin has highlighted the structural vulnerabilities of digital asset treasury companies as falling token prices and tighter liquidity erode their leveraged business models.
Strategy, the bitcoin stockpiling company led by Michael Saylor, saw its shares briefly bounce on Friday after analysts endorsed a plan to authorize up to $1.25 billion in bitcoin sales alongside a share repurchase program. The firm has already sold roughly $218 million of its bitcoin holdings this year to fund dividends and rebuild its U.S. dollar reserves. The company's stock had previously surged through most of last year before hitting two-year lows in the past month.
The move draws attention to a widening crisis among so-called digital asset treasury (DAT) companies, which multiplied last year amid market exuberance over pro-cryptocurrency U.S. policies. Bitcoin has plummeted as much as 33 percent in 2026, pressured by geopolitical tensions, rising oil prices, and a shift in Federal Reserve leadership.
This price decline has broken a core mechanism of the DAT model. Historically, these firms traded at a premium to their net asset value because investors expected them to leverage cheap equity and debt to acquire more tokens. Since late last year, the sector's aggregate market value relative to its crypto holdings—a metric known as mNAV—has fallen below 1. Strategy itself dropped below this crucial threshold late last month.
Trading at a discount severely hamstrings DATs, removing their primary engine for fundraising and undermining the leveraged returns that originally attracted capital. The sector's market capitalization peaked last July when the broader crypto market hit $4 trillion. It has failed to recover from a November trough triggered by a record $19 billion liquidation event sparked by global trade fears.
Macro factors continue to restrict the space. Weekly trading volume in DAT shares, which peaked last August, slumped to a low in February following the nomination of Kevin Warsh as Fed chair. Analysts expect Warsh to shrink the central bank's balance sheet, a dynamic that reduces financial system liquidity and creates a persistent headwind for risk assets.
Faced with these pressures, peer companies are following Strategy's lead in offloading tokens. Nakamoto Inc sold approximately 5 percent of its bitcoin in March and another 600 tokens in June. BitMine Immersion Technologies, the second-largest crypto hoarder behind Strategy with its ether stockpile, has also felt the strain. While DAT executives maintain their success will depend on making smart investment decisions to boost shareholder value, the industry's structural reliance on perpetually rising token prices is facing its most severe test yet.
