A growing number of publicly traded digital asset treasury (DAT) companies are liquidating cryptocurrency holdings to fund share buybacks and defend collapsing stock prices, raising serious questions about the long-term viability of the model.

Recent Examples Highlight the Trend

• FG Nexus sold $32.7 million in Ethereum to finance aggressive share repurchases after its stock plunged 94% from all-time highs, trading at a deep discount to its underlying crypto net asset value (NAV).
• ETHZilla followed suit with a $40 million ETH sale amid similar NAV pressure and equity weakness.

These moves reflect a broader pattern: companies that loaded up on Bitcoin and Ethereum as treasury reserves are now unwinding positions to prevent further stock erosion.

The Numbers Behind the Risk

Collectively, DAT firms manage $42.7 billion in digital assets. With many stocks trading at persistent discounts to NAV — some as high as 60–80% — analysts estimate $4–6 billion in potential forced crypto sales if companies continue using holdings to support share prices.

Why This Is Happening

1. Leveraged Treasury Strategies Many DAT firms issued convertible debt or used leverage to amplify crypto purchases, creating repayment obligations tied to stock performance.
2. Thin Equity Liquidity Low-float, high-volatility stocks make them vulnerable to sharp declines, triggering buyback programs funded by crypto sales.
3. Stalled Corporate Adoption Expected inflows from new corporate treasuries (e.g., sovereign funds, pensions) have slowed amid regulatory uncertainty and market volatility.
4. NAV Discount Spiral As stocks fall below crypto holdings value, selling crypto to buy back shares temporarily narrows the gap — but at the cost of reducing the very assets backing the discount.

Systemic Implications

If multiple DAT firms execute large-scale crypto sales simultaneously:

• Downward pressure on Bitcoin and Ethereum prices
• Potential cascading liquidations in leveraged perpetual markets
• Erosion of confidence in the “corporate treasury” narrative

Some analysts warn this dynamic resembles a slow-motion margin call on the entire sector.

Is This Sustainable?

Short answer: No.

Selling the underlying asset to defend an equity price that exists because of that asset creates a self-reinforcing negative feedback loop. Once meaningful portions of crypto treasuries are liquidated, the original investment thesis — holding digital assets as a superior long-term store of value — collapses.

The Bottom Line

DAT companies are currently choosing short-term stock price stability over long-term crypto conviction. While understandable from a corporate survival standpoint, the strategy is mathematically unsustainable beyond a certain threshold.

As one analyst noted: “They’re eating their seed corn to keep the share price afloat. Eventually, there’s no corn left — and no reason for the stock to exist.”

In summary, the wave of crypto-backed share buybacks by digital asset treasury firms highlights a critical tension between equity market expectations and Bitcoin/Ethereum HODL philosophy — a conflict that cannot persist indefinitely without permanently impairing the core value proposition.