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The crypto market cap -- the value of all cryptocurrencies -- has fallen by over 30% in the past three months. That's a tough pill to swallow for crypto treasury firms, which gained traction last year when prices were soaring. Many use capital, often raised by issuing equity or convertible debt, to buy cryptocurrency.
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Also known as digital asset treasuries (DATs), the majority of these companies hold Bitcoin (CRYPTO: BTC), but some have also focused on Ethereum (CRYPTO: ETH) and Solana (CRYPTO: SOL).
The challenge is that the value of their crypto holdings has plummeted, and many are underwater. They may need to sell their crypto this year to service the debt. Investors may also turn to cryptocurrency ETFs. Here's how those two predictions might unfold.
Crypto treasury firms have followed different playbooks. Each approach, particularly fundraising, will impact their ability to weather a prolonged slump. Broadly speaking, there's a significant risk that companies will be unable to refinance their debt or face margin calls on leveraged positions. Forced selling could push crypto prices lower, creating a vicious cycle.
Strategy (NASDAQ: MSTR), formerly known as MicroStrategy, which pioneered the DAT model, insists it will not sell its crypto, even though its market cap is currently lower than the value of its Bitcoin holdings. Mara Holdings (NASDAQ: MARA), however, may soon sell some of its Bitcoin. Its market cap is $3.05 billion, and its Bitcoin is worth $3.69 billion. On-chain data shows Mara recently moved almost 1,400 BTC to wallets and exchange addresses, which could signal it is readying for a sale.
Meanwhile, BitMine Immersion Technologies (NYSEMKT: BMNR) is sitting on around $7.5 billion in unrealized paper losses. The Ethereum-focused crypto treasury company raised money through private investment in public equity (PIPE) deals. Issuing new stocks can dilute stock value -- BitMine is down almost 60% in the past six months.
Even so, the company recently bought more Ethereum and says it can weather the current price slump. That may be the case, but the company is in a precarious position, and a lot depends on how long prices remain low.
Crypto ETFs and DATs both offer alternative ways to buy cryptocurrency. Some investors don't want to open an account with a crypto exchange and figure out how to store their assets. Crypto treasury firms carry more risk than passively managed ETFs -- including more rights if the company or fund liquidates.
For a time, one of the appeals of DATs was that they offered features -- such as staking and leverage -- that weren't available in ETFs. Staking is important because it is a way to earn yield on certain cryptocurrencies.
However, that's changing. The SEC has already green-lighted a number of altcoin ETFs and leveraged ETFs, albeit with limited leverage. It looks likely to approve staking ETFs this year.
The future of cryptocurrency is difficult to predict because this is still a relatively new and untested asset class. However, it looks like crypto treasuries will be under pressure in 2026, particularly if this slump continues. Unfortunately for crypto investors, if they fall, it will impact the whole ecosystem.
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