{"id":91910,"date":"2025-12-06T14:25:35","date_gmt":"2025-12-06T11:25:35","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=91910"},"modified":"2025-12-06T14:30:19","modified_gmt":"2025-12-06T11:30:19","slug":"coinshares-the-imitation-strategy-boom-has-largely-ended","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/coinshares-the-imitation-strategy-boom-has-largely-ended\/","title":{"rendered":"CoinShares: The Imitation Strategy Boom Has Largely Ended"},"content":{"rendered":"

The bubble of companies with treasuries in Bitcoin and other cryptocurrencies (DAT<\/span>) has largely burst. This view was expressed<\/a> by James Butterfill, head of research at CoinShares.<\/p>\n

In August 2020, Strategy became the first publicly traded company to announce the addition of digital gold to its balance sheet. The initial aim of the initiative was stated as asset diversification and currency risk management.\u00a0<\/p>\n

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“This also aligned with the growing interest of many corporations in distributed ledger technology and the potential efficiency gains from integrating blockchain infrastructure into existing operations,” noted Butterfill.<\/em><\/p>\n<\/blockquote>\n

The Wave of Imitators<\/h2>\n

In practice, the strategy declared by Michael Saylor’s<\/a> company turned into a tool for investing in cryptocurrency using borrowed funds. Many new entrants in the segment followed a similar path, issuing shares not to develop their business but to accumulate more digital assets.<\/p>\n

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“However, over time, this led to a decline in interest and inflow of funds into the sector, simultaneously questioning the sustainability of such strategies,” Butterfill emphasized.<\/em><\/p>\n<\/blockquote>\n

As a result, treasury companies began using the maximum possible number of funding sources to rapidly increase the number of coins stored, hoping that price growth would offset the downturn’s effects.<\/p>\n

The Issues at Hand<\/h2>\n

The market correction exposed the structural deficiencies of DAT, according to Butterfill.<\/p>\n

The lack of operational cash flows contributed to the decline in investor interest.<\/p>\n

Many treasury companies’ traditional businesses generate losses. Although these amounts are relatively small compared to crypto reserves, they could trigger some selling pressure on digital assets, the expert noted.<\/p>\n

In a liquidity crunch, the need to pay dividends and interest payments could lead to the urgent liquidation of cryptocurrency reserves. However, most DATs raised funds through share issuance, and their debt load is not too high.<\/p>\n

An exception is Strategy, which has outstanding loans amounting to $8.2 billion, and the volume of issued preferred shares with dividends reaching $7 billion. In total, this means obligations of about $800 million per year for the company. To cover payments, the firm has already formed a fiat reserve of $1.44 billion<\/a>.\u00a0\u00a0<\/p>\n

More importantly, CoinShares considered what would happen after the mNAV of sector participants falls below 1. This metric compares the market capitalization of the company and the value of its crypto reserve.<\/p>\n

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“Has the DAT bubble already burst? Largely, yes,” wrote Butterfill.<\/em><\/p>\n<\/blockquote>\n

In the summer, shares of many segment representatives traded at a premium of 3x and even 10x. However, the median mNAV value has now fallen below one. At the time of writing, Strategy’s mNAV stands<\/a> at 1.16.<\/p>\n

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Source: CoinShares.<\/figcaption><\/figure>\n

What Lies Ahead?<\/h2>\n

CoinShares sees two main scenarios for future developments:<\/p>\n