Galaxy: Bitcoin-treasury firms enter ‘Darwinian phase’ as premiums collapse
Galaxy Research warns that Bitcoin treasury (DAT) firms have entered a “Darwinian phase” as equity premiums collapse and previously effective leverage becomes a liability. After Bitcoin fell from October highs near $126,000 to around $80,000, issuance-driven growth reversed: NAV-per-share fell below BTC price, open interest and spot liquidity contracted, and an October 10 deleveraging event accelerated losses. Many DAT stocks that traded at large premiums this summer now trade at discounts despite Bitcoin being ~30% below its high. Firms such as Metaplanet and Nakamoto show large unrealized losses with average BTC purchase prices above $107,000; one firm, NAKA, plunged over 98% from its peak. Galaxy outlines three paths: prolonged compressed premiums and stagnating BTC-per-share growth; consolidation via acquisitions or restructurings for over-levered firms; or recovery only for firms that preserved liquidity if BTC reaches new highs. Separately, Strategy raised a $1.44 billion cash reserve to secure dividends and debt coverage for at least 12 months, while Bitwise’s CIO said Strategy won’t be forced to sell BTC if its share price drops. Key keywords: Bitcoin treasury, DAT, NAV, premiums, leverage, deleveraging, Metaplanet, Nakamoto, Strategy.
Bearish
The news is bearish for crypto markets, especially for BTC-linked equities. Key mechanics: issuance-driven premium compression and deleveraging reduce liquidity and amplify downside for firms holding large BTC positions at high average costs. Historical parallels include previous leveraged-structure blowups where financing and issuance cycles reversed (e.g., margin squeezes in 2018 crypto crash and blowups of over-levered trading products). Short-term impacts: elevated volatility, widening discounts on DAT stocks, forced restructurings or fire sales for insolvent issuers, and reduced risk appetite across spot and derivatives markets. Traders should expect increased correlations between DAT equities and BTC spot, possible downward pressure on BTC as firms sell to meet obligations (if reserves are insufficient), and thinner market depth which can exaggerate moves. Long-term impacts: market consolidation as weaker issuers are acquired or folded; survivors that preserved liquidity could outperform if BTC reaches new highs. For traders: favor liquidity-aware strategies, monitor NAV discounts/premiums, watch open interest and funding rates, and stress-test positions against sudden deleveraging events.