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▲ Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Cryptocurrency decline/AI generated image
A warning has emerged that Bitcoin (BTC) treasury asset companies, once called structural buyers in a bull market, could instead become the source of forced selling risks in a bear market.
In a video uploaded on May 29 (local time), the cryptocurrency-specialized YouTube channel Coin Bureau diagnosed that the first-quarter losses of crypto treasury asset companies such as Strategy, Sharplink, Trump Media, and Nakamoto Holdings revealed cracks in the market structure beyond mere accounting shocks. Strategy recorded an all-time high loss of $12.54 billion in the first quarter, while Sharplink incurred an additional $685 million loss, and Trump Media an additional $45 million loss. Coin Bureau pointed out that the combined losses of these three companies exceeded $13 billion, highlighting the fact that these companies were considered structural demand drivers for this bull market as a key risk.
The video explained that publicly listed companies hold approximately 1.2 million BTC, accounting for 5.5% of the total circulating supply. Strategy alone holds about 844,000 BTC, which is approximately 4% of the total final Bitcoin supply. In the Ethereum (ETH) sector, Bitmerion holds 5.28 million ETH, accounting for 4.37% of the total supply, and Sharplink holds 873,000 ETH. Coin Bureau analyzed that the buying pressure from treasury asset companies was closer to a large bet by a single entity, Strategy, rather than broad institutional demand, and that this marginal buyer is now facing strong pressure for the first time.
The core problem for Strategy is the collapse of its premium to net asset value (NAV). MSTR's premium to NAV rose to 3.89 times by the end of 2024 but has now compressed to approximately 1.0 times. In the past, investors paid nearly $4 for every $1 worth of Bitcoin held by Strategy, but now its market capitalization has fallen to a level similar to or even lower than the fair value of its Bitcoin holdings. Coin Bureau explained that this premium was the engine of the flywheel that enabled additional Bitcoin purchases through stock issuance, and if the premium disappears, the buying structure through ATM stock issuance will also lose its power. Strategy holds $2.2 billion in cash and $8.17 billion in long-term convertible notes, and it has opened the possibility of repurchasing $1.5 billion worth of convertible notes due in 2029 through cash, ATM funds, and potential Bitcoin sales.
It was also pointed out that the structures of Sharplink, Trump Media, and Nakamoto Holdings are even more vulnerable. Sharplink held $16.9 million in cash at the end of the first quarter, while its ETH position was valued at approximately $1.85 billion, meaning its cash buffer is less than 1% of its treasury assets. Trump Media supports a $2.3 billion market capitalization and 9,542 BTC in treasury assets with quarterly revenue of $871,200, and a significant portion of its Bitcoin holdings are pledged as collateral for convertible notes, exposing it to margin call risks if prices fall, the video reported. Nakamoto Holdings recorded a $238 million loss in the first quarter, pledged 87% of its Bitcoin holdings as collateral, and sold 284 BTC to secure operating funds. Public mining companies also sold 32,000 BTC in the first quarter alone, exceeding their total sales for 2025.
Coin Bureau warned that this structure could lead to a death spiral of dilution. When stock trades at a premium above net asset value, stock issuance leads to additional Bitcoin purchases, but if the premium drops below 1x, stock issuance dilutes existing shareholders and stops the buying engine. If the company then raises funds through preferred stock, it incurs a fixed dividend burden. Strategy's STRC preferred stock has an 11.5% dividend rate, and preferred dividend obligations could increase from $270 million in 2025 to approximately $940 million in 2026, the video suggested. If ATM issuance is blocked, the company must cover dividends and debt costs with cash, and the $2.2 billion in cash was estimated to sustain obligations for about 18 months. Coin Bureau analyzed that if Bitcoin sales begin thereafter, a reverse flywheel could operate, leading to price declines, reduction in net asset value, further premium compression, and increased forced selling.
The video compared the current situation to the collapse of Grayscale Bitcoin Trust (GBTC) in 2021. At that time, GBTC traded at a premium of up to 46% to its net asset value, but it transitioned to a discount in early 2022, reversing its structure, and the discount rate widened to approximately 41%. In the aftermath, forced liquidations spread across centralized lending markets, including Three Arrows Capital, Genesis, BlockFi, and Celsius, and approximately $2 trillion in cryptocurrency market capitalization evaporated. Coin Bureau emphasized that while GBTC was valued between $40 billion and $45 billion at the peak of the bull market, Strategy's Bitcoin holdings alone are worth approximately $64 billion. Investors should concurrently monitor Strategy's premium to net asset value (1.22x, and whether it breaks below 1x), the collateral structures of Trump Media and Nakamoto Holdings, Bitcoin's 52-week low near $62,791, and the fund flows of spot ETFs holding approximately 1.3 million BTC.
*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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