When bitcoin is in decline, those who have thrown themselves into it with both hands suffer fierce indigestion. The king of cryptos fell from almost $126,000 to around $92,000. A brutal fall which reveals the flaws of a model based on euphoria and debt. For some crypto companies, this drop does not just represent a brake, but an uncontrolled reversal. Result: massive losses, shaken models, and a future in survival mode. Analysis of a reversal as violent as it is predictable.
In brief
- The DAT model collapses with the decline of bitcoin, making equity issuance unprofitable.
- Metaplanet has posted $530 million in unrealized losses since last October.
- Nakamoto, a former star, saw his stock plunge 98% in a few weeks.
- Strategy raises $1.44 billion to secure its dividends during the crypto storm.
BTC down, companies under pressure: the big reversal of the DAT model
The DAT (Digital Asset Treasury) model has long been seen as a performance machine. As long as the stock was worth more than the bitcoin held, companies could issue shares, buy BTC, and boost their capitalization. But since the decline, this virtuous circle has become a vicious circle.
Galaxy Research sums up the situation bluntly :
The bitcoin treasury model is, fundamentally, a liquidity derivative. It only works when the stock is trading at a premium to the net value of its BTC holdings. Once this premium collapses, the whole mechanism reverses.
The collapse of bitcoin triggered this breakdown. Companies like Metaplanet or Nakamoto, which posted enormous unrealized capital gains in the fall, are now posting heavy losses. As of December, Metaplanet showed approximately $530 million in unrealized losses.
The price of BTC is only down 30%, but the shares of these companies have plunged 98% for some. As Galaxy writes:
This price dynamic resembles the spectacular collapses seen in memecoin markets.
From glorified leverage to systemic risk: the amplified crypto effect
The crypto industry loves leverage. But when the tide turns, this lever turns into a burden. This is the case for companies that have bet big on bitcoin. According to Galaxy, “ the same financial engineering that amplified the rise also exacerbated the fall”.
Some companies had purchased BTC at over $107,000. Today, they are in losses. Nakamoto shows a drop of more than 98%. It is no longer a withdrawal, it is a disintegration. At the same time, the shares are trading at a discount, which makes any beneficial issue impossible.
To get out of this, three scenarios emerge. Most likely: permanently compressed premiums, with DAT shares riskier than BTC itself. A second: consolidations or takeovers between solid firms and weakened companies. And finally, an optimistic scenario: a return to favor if BTC reaches new heights. But only those who managed prudently could benefit.
Bitcoin is shaking up businesses, but the entire crypto industry is faltering
This crisis does not only affect the BTC giants. Other cryptos like ETH or SOL, when held through companies, offer staking or lending options. But these alternative incomes have not prevented the general decline in confidence in the markets.
The drop in liquidity and the shock of October 10 — triggering a wave of forced sales on futures — amplified the panic. Many investors are beginning to doubt the viability of these ultra-exposed models. More than a simple price problem, it is a full-scale stress test for the entire sector.
The example of Strategy is illuminating: the company raised $1.44 billion to guarantee 12 months of dividends. Translation: cash becomes king again, even in crypto. Those who did not build reserves or overvalued their model are now paying the bill.
5 numbers that set the scene
- $92,119: this is the current price of bitcoin (BTC);
- -98%: the fall of Nakamoto stock from its peak;
- $530 million: Metaplanet's unrealized losses in December;
- $107,000: Average BTC purchase price for Metaplanet and Nakamoto;
- $1.44 billion: the cash reserve raised by Strategy to reassure the markets.
If crypto companies suffer, mining companies are not spared. Their shares are falling at high speed, sometimes up to -50% in a few weeks. Between soaring energy costs, falling BTC and falling premiums, mining is becoming a headache. The storm is therefore very general on the crypto front.
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