According to a new report, retail investors have incurred losses estimated at $17 billion while trying to gain Bitcoin exposure via digital asset treasury firms like Metaplanet and Michael Saylor’s Strategy. The losses stemmed from an inflated pricing of share premiums, enabling these companies to offload stock at prices significantly exceeding the true value of their crypto assets. The share prices have now plummeted, resulting in a significant number of individual investors left with losses. “The age of financial magic is ending for Bitcoin treasury companies,” analysts stated. According to the report, titled “After the Magic: How Bitcoin Treasury Firms Must Evolve Beyond NAV Illusions,” retail investors “effectively lost around $17 billion, and new shareholders overpaid for Bitcoin exposure by an estimated $20 billion.” The author highlighted a striking reality regarding Strategy: the firm’s shares currently trade at just 1.4 times the value of its Bitcoin holdings, a significant decline from the premiums that once reached triple or quadruple that value in previous times.
The approach adopted by numerous Bitcoin treasury firms was quite straightforward: issue shares at a premium relative to the company’s net asset value, leverage the spread to acquire Bitcoin, and then continue the cycle. According to researchers, a $1 billion investment in Bitcoin propelled Metaplanet’s market value to an impressive $8 billion, before experiencing a decline to $3.1 billion, all while maintaining $3.3 billion in Bitcoin assets. “In the process, shareholders lost $4.9 billion in value, while the company managed to accumulate $2.3 billion worth of Bitcoin — a feat worthy of applause,” they stated.
The report highlights that the disparity between market value and share price raises significant concerns. These businesses assert that a new approach is essential for their survival. According to their perspective, Bitcoin treasury firms should shift from acquiring Bitcoin using “inflated” NAVs to operating more in line with arbitrage-driven asset managers. Although this might limit Bitcoin’s upside potential, the capacity of a Bitcoin treasury firm to adjust to this new model will ultimately determine their financial success.
Ultimately, the report emphasizes that the era of leveraging premium share prices to acquire Bitcoin has reached its limits. Firms that continue relying on inflated NAVs may face further losses, while those that adapt to more sustainable operational models could preserve shareholder value and secure long-term viability in a challenging crypto market.