The “infinite funds glitch” in corporate Bitcoin treasuries has stalled.
For most of this market cycle, trading was simple. Shares of companies that hold Bitcoin traded at a significant premium to their underlying net asset value (NAV).
This allowed companies to issue expensive shares to buy cheaper coins, gradually increasing Bitcoin per share. It was a flywheel of financial engineering that relied on one key input: a sustained equity premium.
Why the premium for Bitcoin treasury companies has evaporated
However, that injection has disappeared amid Bitcoin’s recent price struggle.
According to Glassnode data, the price of BTC has been below the 0.75 decimal point since mid-November, with more than a quarter of the circulating supply in unrealized losses.
Considering this, companies in the Bitcoin Digital Asset Treasury (DAT) basket, a sector with a market capitalization of about $68.3 billion, are down 27% in the last month and nearly 41% in three months, according to Artemis data.
In contrast, Bitcoin itself has lost about 13% and 16% over the same period.
The “high beta” promise of these stocks has been maintained, but strictly to the downside. As a result, the mechanism broke.
The NAV premium that once justified the aggressive issuance strategies of companies like MicroStrategy (now known as Strategy) and Metaplanet has all but disappeared.
At the same time, much of the sector is currently trading near or below 1.0x ‘mNAV’ (debt-adjusted market value).
When premiums turn into discounts, issuing shares to buy Bitcoin becomes value-destroying rather than value-adding.
Therefore, for this sector to return from a basket of distressed proxies to a premium asset class, the market will need more than a simple price rebound. Structural repairs are needed across prices, liquidity and governance.
Underwater cost-based clear
The first hurdle is purely mathematical. The cost base of late entrants to the sector is dangerously high, so a knee-jerk rebound in Bitcoin prices will not be enough to restart the issuance engine.
Artemis data reveals a dichotomy in the market. While early adopters are sitting on a cushion of profits, a new wave of finance companies remains below the surface.
Galaxy Research noted that several BTC DATs, including Metaplanet and Nakamoto (NAKA), are actively building positions, with the average cost base of Bitcoin exceeding $107,000.
With spot prices currently hovering in the low $90,000 range, these companies are facing significant market value losses.
This has serious implications for the story.
When a Treasury trades well above its cost basis, the market treats it as a composite of capital controlled by a visionary allocator. When a company trades below its stock price, the market treats it as a distressed holding company.
The leverage inherent in the model, which Galaxy identifies as price leverage, issuance leverage, and financial leverage, amplifies this pain.
For example, Nakamoto stock has fallen more than 38% in one month and more than 83% in three months, acting more like a bankrupt small-cap stock than a structural proxy stock.
For the premium to grow again, Bitcoin not only needs to recover, it also needs to recover. It needs to remain well above this $107,000 high. Only then can the balance sheet be repaired enough to convince investors that Bitcoin per share is a growing asset rather than a liability that needs to be managed.
Recovery of leverage demand
The second requirement is a change in market sentiment regarding leverage. The collapse in DAT valuations shows that equity investors are now rejecting “unsecured leverage.”
In our analysis, Galaxy framed the DAT sector as the capital markets’ native solution to high-beta exposures. Essentially, this is a way for the fund to express a convex view on Bitcoin without touching the derivatives market.
However, in the current risk-off environment, that convexity works in the opposite direction.
As long as spot ETF flows remain soft and perpetual futures open interest remains depressed, there is limited appetite for additional leverage from equities.
In fact, according to CryptoQuant data, the average weekly volume for spot and futures has further decreased by 204,000 BTC to around 320,000 BTC, a level consistent with the cycle’s low liquidity.
As a result, market volumes have stagnated and positioning has become defensive.
Considering this, if DAT trades at 0.9x NAV, institutional investors are mathematically better off owning a spot ETF like BlackRock’s IBIT. This is because the ETF offers 1.0x exposure with lower fees, tighter spreads, zero execution risk and corporate overhead.
Therefore, for a DAT premium to exist, the market must be in “risk-on” mode, with investors actively seeking the volatility arbitrage that companies like MicroStrategy offer.
Artemis data supports this “lever” punishment. MicroStrategy is down about 30% over the past month, and Bitcoin is down 13%, so the market is pricing in model vulnerability rather than optionality.
For the premium to return, derivative metrics such as funding rates and open interest must signal a new appetite for risk that standard ETFs cannot satisfy.
From offense to defense
Gone are the days of “print stocks and buy BTC at any price.” To regain investor confidence, corporate boards need to focus on defending balance sheets from aggressive accumulation.
In early 2025, the market rewarded blind accumulation. Now we want survivability.
MicroStrategy’s recent move to raise approximately $1.44 billion in cash reserves is a leading indicator of this restructuring. This capital is intended to cover coupon and dividend commitments, effectively building a fortress balance sheet that can withstand extended bear markets without forced sales.
This shift from “discount avoidance” to “premium justification” is important.
Industry experts had warned that the DAT model was vulnerable to a collapse in insurance premiums. Now that disruption has arrived, boards need to demonstrate that future issuances will be disciplined and tied to clear value creation criteria.
mNAV multiples could expand again if investors believe that new money will be deployed judiciously, protecting the downside rather than chasing the upside.
Centralization and indexing
Finally, the market must address the overwhelming concentration risk within the DAT sector.
According to available data, MicroStrategy alone controls more than 80% of the Bitcoin held by the DAT sector and accounts for approximately 72% of the category’s market capitalization.
This means that the fate of the entire asset class is closely tied to MicroStrategy’s specific liquidity dynamics and index status.
Furthermore, the pending MSCI consultation on whether to restrict “digital asset treasury companies” from major indexes is the sword of Damocles hanging over the deal.
If MicroStrategy maintains its index status, passive buying from benchmark-tracking funds could mechanically re-raise the premium and push the rest of the basket upward.
But if it is removed, there will be no mechanical bidding and the sector risks becoming a collection of closed-end funds that permanently trade at a discount to the underlying assets.