Crypto-treasury stocks sink as bitcoin slumps, testing faith of true believers

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The once-booming trade of using corporate balance sheets to bet on cryptocurrencies has hit a sharp downturn, leaving investors divided between “I told you so” and “buy the dip,” The Wall Street Journal reported Sunday.

For much of the year, companies raised cash, or even sold stock, to load up on bitcoin (BTC-USD [https://seekingalpha.com/symbol/BTC-USD]), ether (ETH-USD [https://seekingalpha.com/symbol/ETH-USD]) and other digital tokens. Their shares surged as crypto prices soared, turning firms like MicroStrategy, rebranded as Strategy (MSTR [https://seekingalpha.com/symbol/MSTR]), into massive crypto holdings vehicles. But as bitcoin and ether prices tumble, so do these stocks. Strategy’s market value has fallen from roughly $128 billion in July to about $70 billion.

Big-name backers such as Peter Thiel are taking losses across multiple ventures, including BitMine Immersion Technologies (BMNR [https://seekingalpha.com/symbol/BMNR]) and ETHZilla (ETHZ [https://seekingalpha.com/symbol/ETHZ]), both down more than 20% to 30% in the past month.

Skeptics argue that the business model was unsustainable from the start. One market strategist compared it to paying “$2 for a one-dollar bill,” predicting that inflated valuations would eventually collapse.

When these firms first appeared, they offered institutional investors an indirect way to gain crypto exposure before exchange-traded funds became widely available. Now, those ETFs provide easier, and less risky, access -- reducing the appeal of so-called “crypto-treasury” stocks.

The selloff began after President Trump’s Oct. 10 tariff announcement against China rattled financial markets, compounded by the ongoing government shutdown and uncertainty over Federal Reserve policy. Bitcoin has dropped 15% in a month; shares of Strategy have fallen 26%, while a related leveraged ETF is down about 50%.

Analysts say these companies act as leveraged bets on crypto, amplifying both gains and losses. Some remain insulated thanks to large cash reserves, while others may struggle to raise fresh capital to buy more tokens, putting further pressure on the market.

Matt Cole, CEO of Strive, a bitcoin-holding firm, said many competitors are “stuck” because they bought at higher prices. His company, down nearly 30% this month, recently raised funds through preferred stock to weather the downturn.

Not all investors are discouraged. Cole Grinde, a 29-year-old from Seattle, said he’s buying more BitMine shares despite paper losses of about $10,000. He said he believes in the long-term potential of Ethereum and credited CEO Tom Lee’s experience and charisma for keeping his confidence intact, the Journal reported.

MORE ON STRATEGY, BITMINE IMMERSION TECHNOLOGIES, ETC.

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