The Model Is Being Tested
In October 2025, when Bitcoin was trading above $126,000, corporate treasury stocks were the hottest trade on Wall Street. Strategy (formerly MicroStrategy) was a $75 billion company. Copycats were everywhere.
Eight months later, the combined market capitalization of public Bitcoin treasury companies has fallen from $134 billion to $72 billion, according to Artemis data cited by Bloomberg. That is $62 billion erased.
And in many cases, the stock losses have been worse than Bitcoin's own decline.
Why Treasury Stocks Are Falling Faster Than Bitcoin
The answer is a two-word phrase that sounded like good news in 2024: fair value.
Under ASU 2023-08, the FASB rule that took effect in January 2025, companies holding Bitcoin must mark their positions to market value every quarter. Unrealized gains and losses flow directly through net income.
When Bitcoin was rising, this was a gift. Strategy and its peers reported billions in "profits" that were really just Bitcoin price appreciation. Investors loved it. The stocks traded at massive premiums to their underlying BTC holdings.
Now the mechanism works in reverse. A 53% drawdown in Bitcoin means multi-billion-dollar losses flowing through income statements. For a company whose entire investor thesis is "we hold Bitcoin," reporting a quarter where net income is negative $8 billion is not an accounting footnote. It is existential to the narrative.
The Casualties
The damage is not evenly distributed, but it is broad.
Strategy, which holds approximately 762,000 BTC, has seen its stock decline by more than 60% from its highs. The company's mBTC per share metric — the number Saylor uses to justify dilution — has stalled as new share issuances now occur at prices closer to NAV rather than at massive premiums.
Nakamoto, the Bitcoin treasury firm led by Bitcoin Magazine founder David Bailey, announced a 1-for-40 reverse stock split after its shares collapsed nearly 100% in the past year. A reverse split does not create value — it just makes the share count look less embarrassing.
Japan's Metaplanet, the world's third-largest corporate Bitcoin holder, has disappointed investors with delays around its much-anticipated preferred share offering. The company was supposed to be the Asian Strategy. The market is no longer giving it the benefit of the doubt.
Marathon Digital, Tesla, and dozens of smaller players round out the damage. The entire sector is in a drawdown that exceeds Bitcoin's own losses — which is exactly what leverage does.
The Structural Problem
When Bitcoin goes up, treasury stocks go up more. When Bitcoin goes down, treasury stocks go down more. This is not a bug. It is the feature investors signed up for. But most of them signed up during the "goes up" phase.
The core vulnerability is this: many of these companies financed their Bitcoin purchases with convertible debt, at-the-money equity offerings, or preferred stock. That leverage amplifies returns in both directions. And when the stock price falls below the conversion price on outstanding converts, the dilution math gets ugly fast.
Strategy alone has roughly $6 billion in convertible notes outstanding. If Bitcoin stays below $60,000 through the conversion windows, those notes will either need to be refinanced at much worse terms or converted into shares at prices that dilute existing holders significantly.
The Bigger Question
More than 200 public companies now hold Bitcoin on their balance sheets. The aggregate holdings exceeded $150 billion at peak. The strategy was supposed to be a hedge against dollar debasement — a way to put idle treasury cash to work.
But a 53% drawdown turns a "hedge" into a liability. And the FASB rules that were celebrated as a milestone for institutional adoption have turned into a quarterly headache that forces CFOs to explain billion-dollar swings in net income to shareholders who did not sign up for that kind of volatility.
The question now is whether the corporate treasury model survives the cycle. History suggests it will — Strategy held through the 2022 bear market and emerged stronger. But in 2022, there was exactly one company doing this. Today there are 200, and most of them do not have Saylor's conviction or his cult following.
Bitcoin Gate Take
The corporate treasury trade was never about Bitcoin. It was about leverage, premium-to-NAV, and a stock price feedback loop. The companies that survive this drawdown will be the ones that bought Bitcoin for treasury reasons, not stock price reasons. For the rest, the FASB mark-to-market rules they lobbied for will be the thing that buries them.