{"id":1557,"date":"2025-12-08T05:07:50","date_gmt":"2025-12-08T05:07:50","guid":{"rendered":"https:\/\/microvibenews.com\/?p=1557"},"modified":"2025-12-08T05:07:50","modified_gmt":"2025-12-08T05:07:50","slug":"from-2-600-gain-to-86-wipeout-cryptos-hottest-trade-collapses","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=1557","title":{"rendered":"From 2 600% gain to 86% wipeout, crypto\u2019s hottest trade collapses"},"content":{"rendered":"

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What began the year as one of the best trades in the stock market has, in a matter of months, turned into one of the worst.<\/p>\n

An array of public companies thought they had found a sort of perpetual motion machine: use your corporate cash to buy up bitcoin or other digital tokens and hey presto, your share price shot up even more than the value of the tokens you bought.<\/p>\n

Read: Saylor\u2019s strategy is tagged junk by S&P in initial rating<\/p>\n

It was a playbook invented by Michael Saylor, who transformed his company, Strategy Inc, into a publicly traded bitcoin holding vehicle. And through the first half of 2025 it worked for more than a hundred other companies that followed Saylor\u2019s lead.<\/p>\n

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Michael Saylor during the Bitcoin 2025 conference in Las Vegas on 29 May. Image: Bloomberg<\/p>\n<\/div>\n

Digital asset treasuries (DATs), as these firms became known, turned into one of the hottest trends in the public markets, as share prices skyrocketed and everyone from Peter Thiel to the Trump family piled in.<\/p>\n

Read: Trump family adds $1.3bn of crypto wealth in span of weeks<\/p>\n

One prominent entrant, SharpLink Gaming Inc, soared over 2 600% in a matter of days as the company said it would pivot from its old work in gaming, and sell shares to buy up lots and lots of Ethereum tokens, with one of Ethereum\u2019s co-founders as the chair.<\/p>\n

But it was always hard to explain why tokens should be worth more just because they were held by a public company, and the wheels began to come off the car, at first slowly and then much more quickly.<\/p>\n

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In the case of SharpLink, the stock has fallen 86% from its peak, leaving the whole company worth less than the digital tokens it owns.<\/p>\n<\/blockquote>\n

The company now trades at\u00a0roughly 0.9 times\u00a0its Ether holdings. It was, at least, spared the fate of Greenlane Holdings, which plunged more than 99% this year, despite its\u00a0stash of around\u00a0$48 million\u00a0BERA crypto tokens.<\/p>\n

Listen\/read: The crypto meltdown \u2013 an opportunity or a trap?<\/p>\n

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\u201cInvestors took a look and understood that there\u2019s not much yield from these holdings rather than just sitting on this pile of money, and that\u2019s why they contracted,\u201d B Riley Securities Analyst Fedor Shabalin said in an interview.<\/p>\n

Among the US and Canadian-listed companies that became DATs, the median stock price has fallen 43% this year, according to data compiled by Bloomberg. Bitcoin, by comparison, is down around just 6% since the beginning of the year.<\/p>\n

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Some lucky DATs are still worth more than their underlying holdings, but most have been losers for people who bought them when they were anywhere near their peaks and 70% are on track to end the year below where they began it, according to Bloomberg\u2019s calculations.<\/p>\n

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The worst performers have been public companies that eschewed bitcoin and went for smaller, more volatile tokens.<\/p>\n<\/blockquote>\n

Two of US President Donald Trump\u2019s sons\u00a0lined up behind\u00a0Alt5 Sigma Corp, a public company that set out to buy over a billion dollars of WLFI, a token issued by a separate company that was co-founded by the Trump family. Those shares have fallen about 86% from their peak in June.<\/p>\n

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Donald Trump Jr and Eric Trump during an opening bell ceremony for Alt5 Sigma at the Nasdaq MarketSite in New York on 13 August. Image: Bloomberg<\/p>\n<\/div>\n

The volatility of these stocks is explained, at least in part, by all the money that was borrowed to pay for the corporate crypto acquisitions.<\/p>\n

Strategy came up with a remarkable array of convertible bonds and preferred shares that funded the company\u2019s bitcoin purchases, with the tokens growing to be worth over $70 billion at one point. DATs as a group raised over $45 billion this year to purchase crypto tokens, according to Shabalin at B Riley.<\/p>\n

Now, though, Strategy and all the other companies are on the hook to make the interest and dividend payments on that debt. That is a problem because their crypto holdings, for the most part, don\u2019t generate any cash flow.<\/p>\n

Read:
Michael Saylor shifts to using preferred shares to buy bitcoin as criticism rises
Trump media to raise $2.5bn in capital to buy bitcoin
Bitcoin devotees plowed $3bn into ETFs amid crypto\u2019s surge<\/p>\n

\u201cIf you own Strategy, you own the bitcoin risk plus whatever kind of corporate stress, corporate risk they are taking on,\u201d RIA Advisors portfolio manager Michael Lebowitz said in an interview.<\/p>\n

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Strategy has recently tried to raise more capital to keep the flywheel spinning, turning to\u00a0Europe\u00a0in November to sell perpetual preferred stocks at a discount, after US preferred shares sales fell short of expectations. But those euro-denominated preferred stocks have already fallen below their offer price.<\/p>\n

Meanwhile, for smaller DATs without name recognition, capital raising opportunities are even harder to come by as crypto prices decline and investor enthusiasm wanes.<\/p>\n

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For Strategy, the obvious next step is to sell some of its crypto holdings to pay the bills.<\/p>\n<\/blockquote>\n

And that is what Saylor\u2019s chief executive officer, Phong Le, said the company might do.<\/p>\n

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Phong Le during the Australian Crypto Convention in Sydney on 22 November. Image: Bloomberg<\/p>\n<\/div>\n

\u201cWe can sell bitcoin and we would sell bitcoin if we needed to fund our dividend payments,\u201d Le said on a podcast.<\/p>\n

Le said he will look at this option if the company\u2019s\u00a0so-called mNAV (market-to-net asset value)\u00a0falls below one, a calculation that would suggest the company\u2019s market value has fallen below the value of its crypto holdings.<\/p>\n

These comments shook the DAT industry because Saylor had said many times that he would not sell his bitcoin, and would buy more when the price went down.<\/p>\n

\u201cSell a kidney if you must, but keep the bitcoin,\u201d he joked in a February post on X.<\/p>\n

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The big concern now is that DATs will be forced to sell their crypto, which will push down the prices of those tokens, setting off a downward spiral.<\/p>\n

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\u201cIf there\u2019s a headline that says Strategy sold, even if it\u2019s three bitcoin, I think after everything Michael Saylor has said about he\u2019s never selling a dime, people are going to start to question the whole bitcoin trade,\u201d Lebowitz said.<\/p>\n

Strategy has created a\u00a0$1.4 billion reserve fund\u00a0to cover dividend payments in the near term.<\/p>\n

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And shares are still up over 1 200% since it started buying bitcoin in August 2020. But they are on track for a 38% decline this year.<\/p>\n<\/blockquote>\n

The DAT wipeout risks bleeding into broader markets if traders are using borrowed money, which could force them to sell in order to cover margin calls. For now, the problems have largely cut off the flow of new companies adopting the strategy \u2013 and the burst of capital markets activity that it created.<\/p>\n

But there are signs that there may be at least some new activity from somewhat more valuable DATs acquiring smaller DATs that are worth less than their holdings.<\/p>\n

Read: Saylor model struggles as crypto treasury hype turns to doubt<\/p>\n

Strive Inc, co-founded by former Republican presidential candidate Vivek Ramaswamy, agreed to acquire Semler Scientific Inc in an all-stock deal in September, merging the two bitcoin treasury companies.<\/p>\n

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Semler was one of the first DATs and has fallen 65% this year.<\/p>\n<\/blockquote>\n

Ross Carmel, a partner at Sichenzia Ross Ference Carmel, expects that mergers and acquisitions will pick up for DATs in early 2026 with a focus on the potential for further pain.<\/p>\n

The industry is likely to see more structured securities transactions \u201cthat can be used to give these investors more downside protection in these deals,\u201d Carmel said.<\/p>\n

\u00a9\u00a02025\u00a0Bloomberg<\/p>\n

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