Bitcoin's 31% Drop Pressures Leveraged Crypto Treasuries
The digital asset market is reeling from a prolonged slide that pushed Bitcoin below $64,000 and Ether under $1,900, marking sharp month-over-month declines of 31% and 42%, respectively. This downturn has completely erased the significant gains accumulated following the November 2024 presidential election, putting immense strain on companies with a Digital Asset Treasury (DAT) strategy.
Many of these firms rode the post-election rally by taking on debt to purchase large quantities of cryptocurrencies. This model, which offered investors indirect exposure to the asset class, is now under severe stress. As crypto prices fell through 2025, the stock prices of many DATs have sunk below the value of their digital asset holdings. This inversion exposes them to significant risk, as an activist investor could theoretically force a firm to liquidate its crypto assets to pay down debt, adding further selling pressure to a weak market.
Executives Defend Strategy Based on Long-Term Growth
Despite the market turmoil, executives from leading DAT firms presented a confident outlook at the Digital Assets at Duke conference. They argued that their businesses are more than just passive holding companies. Katherine Dowling, President at Bitcoin Standard Treasury Company, noted her firm employs "yield and 'alpha' strategies" to generate income for paying down its debt. Similarly, Jessica Jonas, Chief Legal Officer of the XRP-focused treasury firm Evernorth, emphasized a long-term perspective, stating, "You don’t sell your Apple stock because tech stocks are in a dip."
Ben Werkman, CIO at Bitcoin treasury firm Strive, explained that these are "operating companies that have decided to structure their balance sheets around a digital asset." He revealed his firm's model is based on two optimistic assumptions: that every company will eventually hold Bitcoin, and that Bitcoin will achieve a 30-35% compound annual growth rate over the next decade. This conviction is what drives their strategy, with Werkman stating, "We’re terrified everyone else is going to figure out what we figured out."
Firms Face Communication Crisis After MSCI Warning
The challenges for DATs extend beyond market prices to include perception and communication. Executives acknowledged a wake-up call came in November when index provider MSCI signaled it might exclude such companies from its indexes. This potential delisting highlighted a fundamental failure in messaging.
The fact that it had to get to that point meant that they weren’t doing a very good job — and none of us were doing a very good job — of communicating, ‘What exactly are these Treasury companies? What are they doing, and why should they be included in indexes?’
— Jessica Jonas, Chief Legal Officer, Evernorth
This incident revealed that the industry had not effectively explained its value proposition or the operational nature of its business beyond simply accumulating crypto. The market's reaction suggests investors are still struggling to differentiate between a simple leveraged crypto bet and a sophisticated operational strategy, a distinction executives are now racing to clarify.
