Bitcoin News Today: Crypto Treasury Firms Face Fragility Risks Amid Rising Redemptions and NAV Discounts

Crypto treasury companies, which now hold over $100 billion in digital assets, are drawing comparisons to speculative investment trends of the 1920s, according to a report by Galaxy Digital. These firms operate by issuing equity to accumulate cryptocurrencies like Bitcoin and Ethereum, relying on a sustained premium between their stock price and net asset value (NAV) to maintain their business model. However, the report warns that this strategy could become structurally fragile as more firms adopt the same playbook [1].

The model hinges on the continued upward trajectory of crypto prices, investor appetite for digital asset exposure, and healthy capital markets. A reversal in any of these factors could trigger a broader market correction. When redemptions or buybacks become widespread, it could signal the beginning of an industry-wide unwind, potentially exerting downward pressure on cryptocurrency prices. Galaxy noted that inflows from these treasury companies have acted as a “persistent bid” for Bitcoin, and outflows would likely reverse that effect [1].

The trend is already showing signs of instability. Several firms’ stocks are trading at or near discounts to NAV, prompting some companies to consider share buybacks to exploit these discrepancies. Bitmine, for instance, has received board approval to repurchase up to $1 billion in shares at management’s discretion [1].

One potential outcome of an industry correction is sector consolidation. Larger firms such as MicroStrategy (MSTR), which remain at a premium, could begin acquiring smaller DATCOs at NAV discounts. These acquisitions would allow firms to effectively purchase Bitcoin at a lower cost. However, such a strategy relies on the acquirer maintaining its premium status [1].

Galaxy highlighted that as these firms grow, their influence over crypto markets increases. An industry-wide unwind would weaken one of the strongest tailwinds for digital assets: their increasing normalization on corporate balance sheets. Additionally, a downturn could reduce the public equity markets’ interest in digital asset exposure, slowing inflows into crypto ETFs and further weighing on crypto prices [1].

The report draws a historical analogy between the DATCO trend and the speculative frenzy of 1920s investment trusts. During that period, new trusts were created at a rate of one per day, and firms like Goldman Sachs Trading Corporation mirrored the behavior of today’s DATCOs. The risks of a self-reinforcing, mass speculative bubble appear to be re-emerging in the crypto space [1].

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[1] https://www.coindesk.com/business/2025/08/01/crypto-treasury-companies-risk-ignoring-lessons-from-history-warns-galaxy