The once-lucrative strategy of corporations leveraging Bitcoin holdings to boost equity value has encountered significant headwinds. Previously, firms could issue shares at a premium to acquire Bitcoin, increasing the cryptocurrency’s value per share in a process viewed as highly accretive. This dynamic fueled a notable divergence where stocks of Bitcoin-holding companies traded far above their underlying net asset value (NAV).
However, recent market conditions have applied substantial pressure. Analysis indicates that late entrants into this strategy acquired Bitcoin at an average cost basis near $107,000. With the digital asset’s price trading persistently below this level, these corporate holdings are now underwater. Consequently, the treasury stocks of these companies are undergoing a severe re-rating, with their premiums to NAV evaporating.
This shift has effectively closed the arbitrage window that allowed for cheap equity issuance to fund Bitcoin purchases. The assets are now widely regarded as distressed, reflecting impaired balance sheets and diminished investor appetite for the once-favored corporate Bitcoin thesis. The trend underscores the heightened risks for public companies adopting aggressive cryptocurrency treasury strategies, particularly when entering at peak market valuations.
