By Vicky Ge Huang
The strategy that rewarded companies for hoarding cryptocurrencies is now punishing them.
Bitcoin, ether and other digital tokens are in a slump, and the shares of companies that followed Michael Saylor's company, now known as Strategy, in stockpiling crypto are sliding, too. The selloff has investors on edge, and on the lookout for signs it will force big firms to unload their holdings -- triggering further declines in digital-coin prices.
The risks of reorienting a corporate strategy around relatively new, and notoriously volatile, assets like cryptocurrencies were always present. But bitcoin and other popular tokens kept climbing last year, fueled in part by signs from Washington that the Trump administration would clear the regulatory hurdles necessary to bring crypto fully into mainstream finance. More companies followed Strategy's lead, convinced of crypto's long-term prospects, and their token purchases helped lift prices even higher.
Now, that trade is reversing. Late last year, investors began to rotate out of riskier holdings like tech stocks and crypto. The selloff punished the shares of crypto-treasury companies, limiting their ability to raise fresh funds needed to buy additional tokens. Delays in passing a key crypto-regulatory measure have further darkened the market's outlook.
This past weekend, bitcoin fell below $76,000, about the average price Strategy paid for its tokens, meaning the company formerly known as MicroStrategy was sitting on some paper losses. Shares of Strategy, which owns more than 700,000 bitcoins, fell 7% Monday and are down 61% since bitcoin touched its record high on Oct. 6.
Ether, the second-largest cryptocurrency, has plummeted to around $2,300, saddling the ether-accumulation firm BitMine Immersion Technologies with more than $6 billion in paper losses on its holdings of nearly 4.3 million tokens. BitMine was down 9% Monday and has tumbled 57% since ether's peak last summer.
Other crypto-treasury stocks have struggled just as much. Bitcoin-accumulation firm Strive fell 12% on Monday, while Forward Industries, which has stockpiled solana, dropped 11%.
Both bitcoin and ether have stabilized since Saturday's sudden washout. Bitcoin was trading at around $78,000 on Monday, 38% below an early-October peak above $126,000. Ether hovered near $2,300, down 53% from last summer's all-time highs.
For much of last year, companies such as Strategy and BitMine issued billions of dollars in new stock or debt to buy bitcoin, ether and other cryptocurrencies. This strategy turned these so-called crypto-treasury stocks into leveraged proxies for the tokens themselves, attracting a wave of individual and institutional investors hoping to amplify their bets on the trade.
Now, the market is bracing for a potential breaking point. Investors are questioning the long-term solvency of crypto-treasury companies, fearing that a continued slide in prices could eventually force some of them to sell their massive holdings. That could trigger a crash in token prices that could haunt the market for years.
"I think that original model that Strategy has pioneered is probably largely dead to anybody except the very biggest who have the scale to create these preferred shares," said Alex Blume, chief executive of bitcoin investment firm Two Prime. "And everybody else needs to figure out an operating business or they're going to go out of business."
Strategy, the pioneer of the crypto-treasury business model, began flashing warning signs late last year. Saylor, long the never-sell-your-bitcoin evangelist, rattled markets by suggesting that his company could sell some of its sizable bitcoin stash or bitcoin derivatives if its mNAV -- its enterprise value divided by the value of its crypto holdings -- were to drop below one.
A crypto-treasury company with an above-one mNAV trades at a premium to its underlying crypto holdings, suggesting that investors are confident about its ability to continue selling shares to buy bitcoin. A company with a below-one mNAV, though, trades at a discount to its cryptocurrencies and may need to sell its tokens to buy back shares.
Saylor's pivot coincided with an announcement that Strategy raised $1.44 billion through a stock sale to help ensure it can meet future dividend and debt-interest payments. The company now has more than $2 billion in cash reserves.
So far, Strategy's mNAV has stood at 1.1, down from more than two a year ago. It has continued to buy bitcoin in recent weeks, snapping up 855 bitcoins for about $75.3 million at $87,974 per bitcoin in the seven days ended on Sunday. The company, which recorded a $17.44 billion unrealized loss in the fourth quarter, is slated to report full financial results on Thursday. Its market cap has dropped from a peak of $128 billion in July to $40 billion now.
BitMine, a big ether-treasury company backed by Peter Thiel and run by veteran Wall Street strategist Tom Lee, is now sitting on about $6.4 billion in unrealized losses after the firm acquired $16.4 billion in ether at an average price of $3,826, according to crypto analytics platform DropsTab. BitMine bought 41,788 ether in the past week.
"Bitmine has been steadily buying Ethereum, as we view this pullback as attractive, given the strengthening fundamentals," said Lee in a Monday release announcing its latest purchase.
Crypto investors and analysts doubt Strategy, BitMine and other crypto-treasury companies will move to sell their token holdings until their shares fall well below their mNAV. Strategy has some convertible debt that isn't due for several years. The debt is also unsecured, meaning that bitcoin can drop significantly without triggering a forced liquidation of its holdings. BitMine has issued no debt.
"Their entire business strategy is to accumulate ether, and help build a narrative that ether should go higher," said Jeff Dorman, chief investment officer of crypto asset manager Arca. "Selling even a tiny fraction of the ether, even to buy back stock, would be such a negative signal effect that it would kill BitMine and ether far beyond any benefit."
However, the real losers are the shareholders who are paying a premium to hold a proxy of the tokens instead of the real thing, analysts say.
"The $7 billion loss for BitMine is really incredible when the company is more like a closed-end fund," said Markus Thielen, chief executive of crypto research firm 10x Research.
Write to Vicky Ge Huang at vicky.huang@wsj.com
(END) Dow Jones Newswires
February 02, 2026 21:00 ET (02:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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