The hottest trading crash in the crypto world! Stock prices of 138 treasury companies halved, the MicroStrategy myth shattered

Bloomberg reported on December 7 that the wildest investment strategy in the crypto world this year is experiencing an epic collapse. In the first half of 2025, more than 138 publicly traded companies in the US and Canada transformed into “digital asset treasuries,” borrowing over $45 billion to buy Bitcoin and other tokens. However, Bloomberg data shows that the median stock price of these MicroStrategy-imitating public companies has fallen 43% this year, while Bitcoin has only dropped 6%.

Perpetual Motion Myth Shattered: Holding Tokens Doesn’t Equal Value Creation for Public Companies

(Source: Bloomberg)

This strategy was pioneered by Michael Saylor, who transformed his company MicroStrategy (MSTR) into a publicly traded Bitcoin-holding platform. In the first half of 2025, over a hundred firms followed Saylor’s lead and reaped benefits, earning them the moniker “Digital Asset Treasuries,” becoming one of the hottest trends on the public market. As stock prices soared, high-profile figures from Peter Thiel to the Trump family jumped on board.

The core logic of the strategy seemed flawless: public companies buy crypto, and investors treat these firms as de facto crypto ETFs, assigning them premium valuations. In theory, if a company holds $100 million worth of Bitcoin but has a market cap of $150 million, investors are essentially paying $150 million for $100 million in Bitcoin plus the company’s other businesses. In bull markets, this premium can reach 2-3x, sending the company’s stock price far above the value of its token holdings.

However, there’s a fatal flaw in this logic chain. First, why would investors pay a premium to buy tokens held by a public company instead of just buying the tokens themselves? If the goal is simply crypto exposure, buying Bitcoin or Ethereum ETFs is easier and more direct. Second, public companies holding tokens don’t create extra value—instead, they add management fees, compliance costs, and operational risk. Third, most of these companies use debt financing to purchase tokens, and the interest and dividend obligations from that debt continuously erode shareholder value.

SharpLink Gaming exemplifies the collapse of this logic. The company announced it would abandon its original gaming business, sell shares, and use the proceeds to buy large amounts of Ethereum tokens—its chairman is one of Ethereum’s co-founders. The news caused a frenzy in the crypto community, with investors believing this was an “Ethereum founder’s personal endorsement,” causing the stock to surge over 2,600% in just a few days. However, once the hype faded, the market realized the company had no real business other than holding Ethereum, and Ethereum’s performance was unremarkable.

Now, SharpLink has plummeted 86% from its peak, making the company’s total market value lower than the value of its digital token holdings. The company’s current stock price is only 0.9 times the value of its Ethereum holdings, meaning investors can buy $1 worth of Ethereum for $0.90. This discount phenomenon completely overturns the “premium logic,” showing that the market has completely lost confidence in this business model.

A Debt-Driven Death Spiral Is Taking Shape

(Source: Bloomberg)

The extreme volatility of these crypto stocks is at least partly due to the massive borrowing companies undertook to acquire crypto assets. MicroStrategy devised a rather “remarkable” financing mix—using convertible bonds and preferred shares to fund its Bitcoin purchases, at one point growing its token holdings’ value to over $70 billion. According to B. Riley’s Shabalin, “digital asset treasuries” as a whole have raised over $45 billion this year to buy crypto tokens.

The problem is, most of the crypto assets they hold generate no cash flow. Bitcoin and Ethereum don’t pay dividends or interest—only price appreciation can create book gains. But the debt requires regular payment of hard cash interest and dividends. MicroStrategy faces about $750 million to $800 million in fixed annual debt obligations, which must be paid from company cash flow or asset sales.

Michael Lebowitz, portfolio manager at RIA Advisors, said in an interview: “If you own MicroStrategy stock, you’re taking on both Bitcoin risk and all the various corporate and company-level pressures they’re under.” This double risk exposure makes these stocks riskier than simply holding crypto, not less. When crypto prices fall, not only do book assets shrink, but the company must continue fulfilling its debt obligations, and this cash flow mismatch can lead to financial distress.

Three Fatal Flaws of the Digital Asset Treasury Model

Cash Flow Black Hole: Massive debt requires regular payments, but token holdings generate no cash flow

Double Risk: Exposed to both token price volatility and company operational/debt risk

Valuation Paradox: When market value is below token holdings, the company can’t raise capital by issuing stock and is forced to sell tokens

Recently, MicroStrategy tried refinancing to keep this “flywheel” spinning. Due to disappointing sales of its US-issued preferred shares, the company turned to Europe in November, selling euro-denominated perpetual preferred shares at a discount. But these euro perpetual preferreds have already fallen below their issue price, showing that even in international markets, investor confidence in this model is crumbling.

Altcoin Landmines and Trump-Linked Stocks Both Suffer Heavy Losses

At least SharpLink avoided the fate of Greenlane Holdings. The latter holds about $48 million of BERA crypto tokens, yet its stock price has plunged more than 99% this year. The worst performers are public companies that shunned Bitcoin and instead bet on smaller, more volatile tokens. Small tokens lack liquidity and market depth, making them prone to wild swings under market pressure, which further amplifies company financial risk.

Two of President Trump’s sons once backed Alt5 Sigma Corp., a public company that planned to spend over $1 billion buying WLFI—a token issued by another company co-founded by the Trump family. Since its June peak, Alt5 Sigma’s stock has fallen about 86%. Even with presidential family backing, the collapse of this crypto business model couldn’t be stopped.

According to Bloomberg-compiled data, the median stock price of public companies that transitioned to “digital asset treasuries” in the US and Canada has dropped 43% this year. By contrast, Bitcoin has only fallen about 6% since the start of the year. This huge disparity shows that not only did public companies’ token holdings fail to amplify returns, but debt burdens and operational issues caused them to underperform simple token holding by a wide margin.

For MicroStrategy, the next obvious step is to sell some of its crypto holdings to pay the bills. Saylor’s company CEO, Phong Le, has also indicated the company may do so. On a podcast, Phong Le said, “We can sell Bitcoin. If we need to raise funds to pay dividends, we’ll sell Bitcoin.” This statement shocked the entire “digital asset treasury” sector since Saylor had repeatedly emphasized he would never sell Bitcoin before.

The biggest concern now is that crypto “digital asset treasuries” may be forced to dump crypto assets, depressing token prices and triggering further cascading declines—a downward spiral. Traders using leverage on these stocks may face margin calls, sparking broader market sell-offs. This shift from get-rich-quick myth to financial distress has become one of the most painful lessons for the crypto world in 2025.