Is the crypto hoarding model nearing its end?

The stock prices of publicly listed companies holding digital assets continue to fall, and market confidence continues to decline. According to data tracked by Architect Partners, the average share price of 15 companies holding digital assets fell by 15% last week. Many of these companies went public this year. Currently, over 100 companies have added cryptocurrencies to their portfolios, but some are struggling with insufficient product differentiation and high risk. This model may be running out of steam: Bitcoin purchases by digital asset holding companies have decreased, and the growth of their total Bitcoin holdings has slowed. In addition, some investors are beginning to question whether investing in cryptocurrencies through these companies is more valuable than holding them directly.

That this situation has unfolded is unsurprising. Stock prices had soared too fast, the promises had become too grand, and the numbers had become increasingly bizarre.

These emerging companies—publicly traded companies designed to buy cryptocurrencies and often doing little else—were supposed to offer investors a way to profit from the digital asset boom.

Yet, as stock prices have fallen and market confidence has waned, the question is no longer whether the model is under pressure but increasingly how, and how quietly, it will unravel. Even as risky assets, from stocks to corporate bonds, rallied ahead of an expected Federal Reserve rate cut, shares of digital asset treasuries (DATs) were mired in a worsening sell-off, and their tokens also tumbled. Among the 15 DATs tracked by financial advisory firm Architect Partners, the average share price fell 15% last week. Examples abound. For example, ALT5 Sigma Corp., which holds the WLFI token issued by World Liberty Financial, a Trump-affiliated company, saw its stock plummet by about 50% in just over a week. Kindly MD Inc., a medical services provider that holds Bitcoin through its subsidiary Nakamoto Holdings, is down about 80% from its May high. Other so-called DATs pegged to Ethereum and Solana have also fallen, dragging down the perceived value of their tokens on paper. “In the U.S., there are too many of these companies, and there’s very little differentiation,” said Ed Chin, co-founder of Parataxis Capital, which recently invested in a South Korean Bitcoin treasury company. Most of the more than 100 companies buying cryptocurrencies for their treasury reserves were founded this year, and many are small businesses that recently transformed overnight—including Japanese nail salons, marijuana sellers, and marketing agencies. Still, in a sign that the frenzy hasn't completely subsided, some companies are still successfully riding the speculative wave. Eightco Holdings Inc. saw its shares soar more than 3,000% on Monday after announcing plans to buy Worldcoin and appointing Wall Street analyst Dan Ives to its board of directors. For some, the appeal is clear: the shell of a public company offers exposure to cryptocurrencies, with potential upside leverage, packaged in the familiar form of equity. In some cases, the model can still command significant premiums. But the trade is becoming crowded. Too many companies have rushed in with little to offer beyond their tokens, and as prices slide, confidence in maintaining those premiums is faltering.

Bitcoin Hoarding by ‘Strategy’ Imitators

Source: CryptoQuant, Bitcointreasuries.net

New data suggests the model may be losing momentum under its own weight—both in terms of market sentiment and the actual pace of Bitcoin purchases. According to CryptoQuant data, digital asset treasury firms purchased just 14,800 bitcoins in August, a sharp drop from 66,000 in June. The average purchase size has also shrunk, falling to 343 bitcoins last month—an 86% drop from its 2025 peak. Meanwhile, the growth in total bitcoin holdings has slowed significantly, with treasury firm accumulation falling from 163% in March to just 8% in August. In recent months, many DATs have ventured into more creative areas. Cryptocurrency lenders, brokers, and derivatives desks have tailored a financing ecosystem specifically for treasuries: Bitcoin-backed loans, token-linked convertible bonds, and structured payments. For some, these tools offer speed and flexibility that banks can't match. But for others, they transform the pursuit of income into a risky endeavor, adding new risks to volatile assets or forgoing upside potential for short-term gains, all amidst a shrinking margin of error. Smarter Web Co., a London-based web design company that holds Bitcoin, has issued bonds tied to the value of the tokens, rather than the British pound. This means that if Bitcoin rises, so too will the company's outstanding balance. Smarter Web CEO Andrew Webley said only 5% of the company's treasury reserves are exposed to the instrument, which he believes is actually less risky than taking on fiat-denominated debt. "If Bitcoin appreciates, as long as our stock outperforms Bitcoin, it will convert into equity," he said. "If it declines—and we're not overly exposed—the worst-case scenario is we repay our debt. Our debt is denominated in Bitcoin." DDC Enterprise Ltd., a once-troubled restaurant company, raised more than $1 billion in debt, equity lines, and shelf offerings, much of which remains unspent. Its stock price has plummeted after surging a few weeks ago. DDC did not respond to a request for comment. Nasdaq, where many of these companies are listed, has reportedly begun requiring some token-holding companies to seek shareholder approval before issuing new shares to finance token purchases. The stock offering model is a core way for DATs to raise capital without taking on debt. Two of the most prominent DATs, Strategy and its Japanese counterpart Metaplanet Inc., have seen their share prices plummet recently after booming over the past year, demonstrating that even market leaders are not immune to shifting sentiment. Some in the industry have begun discussing potential consolidation, particularly if weaker companies continue to struggle and stronger ones begin to view their peers' token holdings as acquisition targets. Strategy failed to be included in the S&P 500 in Friday's index reassessment, despite meeting the eligibility criteria. Its share price has been largely stagnant since April, even as Bitcoin has rebounded, reducing its Bitcoin market capitalization multiple, known as mNAV, to about 1.5. On Monday, the firm purchased $217 million of Bitcoin through an on-market offering. Strategy did not respond to a request for comment. The Rise and Fall of Strategy’s mNAV Premium Source: Bloomberg, strategy Cryptocurrency lenders are also noticing the growing demand for flexible financing. Two Prime, which offers bitcoin-backed loans, is one of the firms seeing a rise in interest from DATs, according to CEO Alexander Blume. The firm typically underwrites loans between $10 million and $500 million and currently has $1.25 billion in active loans outstanding.

Recently, it launched a fixed-repayment structure at maturity that eliminates the monthly interest obligation, a design designed to give borrowers more breathing room in volatile markets.

"Bitcoin finance companies are a growing area for us," Blume said. "We've seen deal sizes get bigger and bigger over the past year."

Whether this new financing ecosystem will sustain that model or simply delay its demise is unclear. For now, the next phase may not be a dramatic unraveling, but a slow fade, with share prices gradually declining and token buying stalling. Some investors are struggling to comprehend it all. Why buy cryptocurrency through a company fraught with expenses, risk, and equity dilution, rather than holding the tokens directly or through an ETF? I've been trying to convince myself to buy some of these DATs," said Travis Kling, chief investment officer at Ikigai Asset Management. "Haven't done it yet. Probably never will." To him, the whole setup feels like "the last gasp of a cycle that couldn't come up with anything more stupid than this."