Myth shattered! The wave of public companies holding crypto assets collapses, stock prices plummet by 86%—what's behind it?

According to Bloomberg, the “digital asset treasury” mania that swept the capital markets in the first half of 2025 is collapsing at an astonishing pace. Data shows that DATs companies—those listed in the US and Canada that converted large amounts of company cash into Bitcoin and other cryptocurrencies—have seen their median stock price plunge 43% this year, far exceeding Bitcoin’s own drop of about 6% over the same period. A high-profile case, SharpLink Gaming, saw its stock soar over 2,600% after announcing a pivot to Ethereum holdings, but then crash 86% from its peak, leaving the company’s market cap below the value of its token holdings.

At the core of this crash is the realization by investors that simply holding cryptocurrency doesn’t generate returns, while the massive debt companies took on to acquire tokens—with mounting interest and dividend payments—has become an unbearable burden.

From “Perpetual Motion Machine” to “Meat Grinder”: The Rise and Fall of the DATs Craze

The story began like a perfect financial fairy tale. Led by MicroStrategy, the strategy of “converting corporate balance sheets to Bitcoin” saw remarkable success from 2020 to the first half of 2025. The company’s stock soared along with Bitcoin’s price, inspiring more than a hundred other publicly traded companies to follow suit. These companies, dubbed “digital asset treasuries,” seemed to have found a “perpetual motion machine”: using corporate funds to buy crypto assets, their stock prices would rise even more than the underlying assets themselves, creating extra shareholder value and providing ammunition for further fundraising and acquisitions.

This craze peaked in the first half of 2025, becoming the hottest trend in public markets, drawing celebrities from Peter Thiel to the Trump family. The logic of capital markets seemed to be reset: a company’s value was no longer tied solely to its core business, but increasingly to the size and audacity of its crypto holdings. A flood of capital poured into the sector through convertible bonds, preferred shares, and other methods. According to B. Riley Securities analysts, the DATs group raised over $45 billion this year alone to purchase crypto tokens.

However, this fairy tale had a fundamental logical flaw: why should tokens become more valuable simply because they’re held by a public company? As the market gradually returned to rationality, the wheels started to come off. Investors began to question whether a business model based solely on “sitting on a pile of digital assets” could generate sustained cash flow or returns to justify lofty valuations and debt. When crypto prices stopped their one-way climb—or even entered a period of consolidation or decline—the “flywheel” powered by valuation gains and subsequent fundraising instantly lost momentum.

Deep Crash: Why Have Stock Prices Fallen More Than Cryptocurrencies?

Even more striking than the overall market correction is the DATs companies’ “excessive declines.” Bloomberg data shows their median stock price has dropped 43%—several times Bitcoin’s own dip. Many companies have seen their stock prices cut in half from record highs; some, like Greenlane Holdings, have plunged over 99% this year, despite still holding BERA tokens worth about $48 million. This “deep discount” reveals the market’s outright rejection of their business model.

The core reason is “double-layered risk.” Michael Lebowitz, portfolio manager at RIA Advisors, succinctly points out: “If you own MicroStrategy, you’re taking on Bitcoin risk, plus whatever company-specific pressures and risks they have.” For DATs investors, they not only bear the underlying crypto asset’s price volatility but also the operational, financial leverage, and governance risks of the companies themselves.

The most deadly risk—financial leverage—has now surfaced. These companies borrowed massively (via bonds or preferred shares) to buy crypto assets, and now must pay interest and dividends on those debts. The problem is, their crypto holdings (Bitcoin, Ethereum, etc.) generate no cash flow. When markets were booming and stock prices high, they could easily raise funds by issuing new shares to cover interest payments; but when stock prices crash and the fundraising window slams shut, a cash flow crisis hits suddenly. MicroStrategy CEO Phong Le recently stated publicly that if the company’s so-called “adjusted net asset value” drops below 1, they’ll consider selling Bitcoin to pay dividends—a sharp contrast to founder Michael Saylor’s previous vow to “never sell a coin.”

Key Data on the DATs Crash

Median stock price drop (2025 YTD): -43%

Bitcoin drop over same period: approx. -6%

Extreme gain (SharpLink): over 2,600% at peak

Extreme pullback (SharpLink): down -86% from high

Total industry fundraising (for token purchases): over $45 billion

MicroStrategy YTD stock performance: projected -38%

MicroStrategy emergency reserve: $1.4 billion (for upcoming dividend payments)

Star Projects Collapse: From Trump-Linked Concepts to “Penny Stock” Warnings

Amid the DATs collapse, several high-profile projects became textbook examples of the crash. SharpLink Gaming Inc. is particularly dramatic. The company announced a pivot from gaming to large-scale Ethereum purchases funded by stock sales, bringing on an Ethereum co-founder as chairman. The news sent its stock soaring over 2,600% in days. However, the frenzy faded quickly, and the stock has now fallen 86% from its peak, leaving the company’s total market cap below its Ethereum holdings, with a price-to-book ratio of just 0.9.

Another notable case involves the Trump family. Trump’s two sons publicly endorsed Alt5 Sigma Corp., a listed company planning to buy over $1 billion in WLFI tokens issued by a company co-founded by the Trump family. Since peaking in June, the company’s stock has also dropped about 86%. These cases reveal a more dangerous trend: the worst-performing DATs are often those that shunned Bitcoin in favor of smaller, more volatile altcoins.

The collapse trajectory of these companies is clear and brutal: leveraging celebrity or hot narratives, they pump up stock prices during a crypto bull run with aggressive pivot announcements → raise funds at the top and buy related tokens → when sentiment turns or token prices fall, the lack of business fundamentals causes stock prices to crater → market cap falls below net asset value, triggering a “liquidity crunch, tough fundraising, forced asset sales to stay afloat” death spiral. They not only lose out in market speculation, but also shake investor confidence in the entire “public company crypto-ization” narrative.

Chain Reactions and the Road Ahead: Sell-Off Waves and Industry Shakeout

The market’s biggest fear now is that DATs’ troubles could trigger a chain reaction, turning individual stock risk into systemic risk. The greatest worry: if giants like MicroStrategy, which holds 650,000 Bitcoins, are forced to sell—even a small amount—to meet debt interest payments, it could deal a devastating psychological blow to the market. Lebowitz warns: “If there’s a headline saying ‘MicroStrategy sold,’ even if it’s just three Bitcoins, given Michael Saylor’s previous insistence on never selling a single coin, people will start questioning the whole logic of Bitcoin trading.” This could spark panic selling, creating a vicious cycle of “stock price drop → forced coin sale → crypto price drop → further stock price drop.”

To cope with the looming liquidity crisis, MicroStrategy has set up a $1.4 billion reserve fund to cover upcoming dividend payments and is trying to raise funds in Europe by issuing discounted perpetual preferred shares, though those shares have already fallen below issue price. For smaller DATs lacking name recognition and fundraising ability, the situation is even tougher. The fading enthusiasm in capital markets has all but cut off new companies from adopting this strategy.

Industry consolidation may become the next phase. Signs are already emerging: Strive Inc., co-founded by former Republican presidential candidate Vivek Ramaswamy, agreed in September to acquire another Bitcoin treasury company, Semler Scientific Inc., via an all-stock deal. This could spark a wave of “big fish eat small fish” mergers, targeting companies whose market value sits well below their net crypto asset value. Lawyer Ross Carmel predicts DATs M&A will accelerate in early 2026, with deal structures putting more emphasis on downside protection for investors.

This mass collapse of DATs is, in essence, a brutal reckoning of “financial engineering” versus “real asset value.” It ruthlessly exposes that no matter how glamorous the packaging, any business model unable to generate cash flow—relying solely on asset price appreciation and subsequent fundraising—is a castle built on sand, unable to withstand the shifting tides. For the crypto market, this is a necessary phase of deleveraging and bubble deflation, flushing out the weakest and most speculative capital. It serves as a reminder to all participants: true long-term value will ultimately return to foundational networks and protocols that can generate utility and returns, rather than intermediary shell companies treating them merely as financial speculation tools. The experiment of public company crypto-ization is far from over—but its next chapter must be built on a more solid, sustainable business model.