"Struggle of Trapped Beasts": Crypto Treasury Firms Are Losing Their Bottom-Fishing Ability

Recently, as the crypto market declined, crypto treasury companies (such as Strategy), often seen as the “main force” of the market, failed to buy the dip on a large scale. The fundamental reason is not a lack of funds, but rather that their core financing mechanisms have become paralyzed during the downturn.

Author/Source: Frank, PANews

During the brief bull run that began in April, crypto treasury companies acted as the main buyers in the market, providing a continuous stream of “ammunition.” However, when both the crypto market and the companies’ stock prices dropped simultaneously, these companies seemed to collectively stall.

When prices hit a stage bottom, theoretically, this should be the perfect time for treasury companies to buy the dip. In reality, their buying slowed down or even stopped altogether. This collective inaction is not simply due to “ammunition” being exhausted at higher prices or panic, but rather because the highly leveraged premium-based financing mechanism became structurally “cash-strapped” during the downturn.

Hundreds of Billions in “Ammunition” Locked Up

To understand why these DAT companies are facing a “cash-strapped while holding funds” dilemma, we need to analyze the sources of their ammunition.

Taking Strategy, currently the leading crypto treasury stock, as an example, its funding mainly comes from two sources: one is “convertible notes,” i.e., raising funds through low-interest bonds to buy crypto; the other is the At-The-Market (ATM) issuance mechanism, which allows the company to issue new shares to raise funds and buy more bitcoin when the stock price trades at a premium to the value of its crypto holdings.

Before 2025, Strategy’s main source of funds was convertible notes. As of February 2025, Strategy had raised $8.2 billion through convertible notes to buy more bitcoin. Starting in 2024, Strategy began large-scale use of the ATM equity program, which is more flexible: whenever the stock price is higher than the value of its crypto holdings, the company can issue new shares at market price to buy crypto. In Q3 2024, Strategy announced a $21 billion ATM equity plan, and in May 2025, a second $21 billion ATM plan was established. As of now, the remaining quota for these plans is still $30.2 billion.

However, these quotas are not cash, but rather the amount of Class A preferred and common shares available for sale. For Strategy, to turn these quotas into cash, it needs to sell shares on the market. When the stock price trades at a premium (e.g., $200 per share with $100 in bitcoin per share), Strategy can sell shares, effectively converting new shares into $200 cash, then buy $200 in bitcoin, increasing the bitcoin per share—this was the prior “unlimited ammunition” flywheel logic. However, when Strategy’s stock price mNAV (mNAV = market cap / value of held crypto) drops below 1, this reverses: selling shares means selling at a discount. Since November, Strategy’s mNAV has been below 1 for a long time. Thus, even though Strategy still has a lot of shares it could sell, it cannot use the proceeds to buy bitcoin.

In fact, not only did Strategy fail to raise funds to buy the dip recently, it also chose to raise $1.44 billion by selling shares at a discount, setting up a dividend reserve pool to support preferred stock dividends and pay interest on existing debt.

As the standard model for crypto treasuries, Strategy’s mechanism has been widely copied by other treasury companies. Therefore, when crypto assets fall, the reason these treasury companies fail to buy the dip is not reluctance, but that their “ammunition supply” is locked due to stock prices falling too much.

Nominal Firepower Is Strong, but in Reality “All Gun, No Bullets”

So, aside from Strategy, how much buying power do other companies have? After all, there are now hundreds of crypto treasury companies in the market.

Currently, despite the large number of crypto treasury companies, their future buying potential is not that great. There are mainly two types: one is companies that naturally hold crypto assets, whose holdings come from pre-existing assets rather than new debt, and whose ability or motivation to raise funds is limited. For example, Cantor Equity Partners (CEP), ranked third in bitcoin holdings with an mNAV of 1.28. Its bitcoin holdings mainly come from a merger with Twenty One Capital, with no new purchases since July.

The other type follows a Strategy-like model, but due to recent sharp declines in their stock prices, their mNAVs have generally fallen below 1. Their ATM quotas are also locked, and the flywheel can only restart if stock prices recover above 1.

Aside from issuing debt or selling stock, the most direct “ammunition supply” is cash reserves. Take BitMine, the largest Ethereum DAT company, for example: though its mNAV is also below 1, it has continued its buying plan recently. As of December 1, BitMine reported $882 million in unencumbered cash on the books. Chairman Tom Lee recently stated, “We believe Ethereum has bottomed, and BitMine has resumed accumulation, buying nearly 100,000 ETH last week—double the amount from the previous two weeks.” BitMine’s ATM quota is also huge: in July 2025, the plan’s total quota was raised to $24.5 billion, with nearly $20 billion still available.

BitMine Position Changes

Additionally, CleanSpark announced at the end of November that it would issue $1.15 billion in convertible notes this year to purchase bitcoin. Japanese-listed Metaplanet has also been active recently, raising over $400 million since November through bitcoin-backed loans or new share issuances to buy bitcoin.

In total, the “nominal ammunition” (cash + ATM quota) on company books totals hundreds of billions of dollars, far exceeding the previous bull market. But in terms of “effective firepower,” the actual number of deployable bullets has decreased.

From “Leverage Expansion” to “Yield Survival”

In addition to being locked out of their ammunition, these crypto treasury companies are also shifting their investment strategies. During bull markets, most companies followed a simple approach: buy blindly, raise more funds as the price rises, then buy more. As conditions shift, many companies not only face more difficulty raising funds, but also have to meet interest payments on previously issued debt and cover operating expenses.

As a result, many have turned to “crypto yield,” participating in network staking to earn relatively stable rewards, which can be used to pay financing interest and operating costs.

BitMine, for instance, plans to launch MAVAN (Mainland America Validator Network) in Q1 2026 to start ETH staking, expected to generate $340 million in annualized revenue. Similarly, Upexi and Sol Strategies—treasury companies on the Solana network—can achieve about 8% annualized yield.

It’s foreseeable that as long as mNAV cannot return above 1.0, accumulating cash to deal with maturing debt will remain the main theme for treasury companies. This trend also directly affects asset choices. Since bitcoin lacks native high yields, bitcoin-only treasuries are slowing accumulation, while Ethereum, which can generate cash flow through staking to cover interest, has been more resilient in treasury accumulation.

This shift in asset preference is essentially a compromise by treasury companies in response to liquidity constraints. When access to cheap funds via stock price premiums is cut off, finding yield-generating assets becomes their only lifeline to maintain healthy balance sheets.

In the end, the “unlimited bullets” narrative is merely a pro-cyclical illusion based on stock price premiums. When the flywheel locks up due to a discount, the market must face a sobering reality: these treasury companies have always been trend amplifiers, not contrarian saviors. Only when the market recovers first can the funding tap be turned back on.