After long being regarded as a major driver of institutional capital into crypto, the Treasury model shows cracks as buying demand drops sharply, many companies trade below their mNAV, and the risk of forced asset sales looms.
These signs suggest that the “treasury play” is no longer an unbeatable strategy, but could evolve into a systemic risk for BTC and ETH.
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Crypto Treasury Lost Magic?
According to analyst Caprioleio, the pace of purchases by Bitcoin Treasury Companies (publicly traded firms that accumulate BTC as treasury assets) has slowed considerably. These firms are still buying, but daily purchases’ “frequency” and “intensity” have fallen compared to prior peaks. This shift has led the market to question whether the model remains sustainable or if it’s merely a temporary dip.
Treasury company demand. Source: CaprioleioSponsored
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One view suggests that treasury companies act in cycles, rather than buying consistently. Their willingness to keep accumulating even during periods of lower rates shows a more strategic accumulation approach rather than fatigue. It may be a tactical pause before re-engaging.
Beyond reduced accumulation, the market risks force treasury companies to sell assets. An analysis by TheDeFinvestor revealed that several ETH treasury companies are now trading below their mNAV. This means their public stock price is lower than the net value of ETH they hold.
ETH treasury company’s mNAV. Source: TheDeFinvestorWhen mNAV < 1, the ability to raise funds through equity or bond issuance is impaired, companies that rely on continuous capital raises to purchase more ETH may hit a ceiling on available funding, and in a worst-case scenario, may be forced to sell assets to meet obligations.
The system’s response to Bitcoin has been even more severe. The shares of many “Bitcoin treasury companies” have experienced much greater volatility than BTC.
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As BeInCrypto reported, when the bitcoin price dropped, the share prices of these companies plunged 50–80% in a short period. This has inflicted heavy losses on shareholders and shaken confidence in treasury stocks relative to their underlying assets. The fact that shares are collapsing faster than BTC highlights two risks: dilution/settlement pressure and the psychological spiral that accelerates mass sell-offs.
Greatest Financial Arbitrage or Ponzi?
At their core, these companies raise capital (through equity or bonds) and use the proceeds to buy BTC/ETH, expecting the assets to appreciate faster than the cost of capital. If the cycle continues upward, the model works. But if capital raising becomes difficult (due to falling mNAV, higher interest rates, or weakening market confidence), the fragility of the model is exposed.
Some analysts call this “the greatest financial arbitrage in history.” Others, however, bluntly describe it as a “Ponzi scheme” sustained by the belief that prices will always rise.
The treasury model has created a new class of investors and fueled significant buying demand during bull markets. But today, weak demand, falling mNAV, and severe share price volatility are warning signs of a harsh shake-out phase. Ultimately, only companies with sustainable financial models, transparency, and strong risk management will survive.
Source: https://beincrypto.com/the-shaking-confidence-in-treasury-strategy-it-slowes-down-now/
