[Bitcoin Now] Crypto Treasury Stocks Plunge as Cryptocurrency Prices Tumble

Strategy Drops 26% as Bitcoin Falls 15%
Concerns Over Crypto Reserve Strategies Exerting Downward Pressure on Coin Prices

The Wall Street Journal (WSJ) reported on November 9 (local time) that the recent sharp decline in the prices of cryptocurrencies such as Bitcoin and Ethereum has dealt a significant blow to Crypto Treasury Companies (CTCs).

Michael Saylor, Chief Executive Officer (CEO) of Strategy. Photo by Reuters and Yonhap News.

The strategy of holding cryptocurrency reserves was pioneered by Strategy (formerly MicroStrategy), a small software company. Michael Saylor, the company’s co-founder and Chief Executive Officer (CEO), transformed his company into a Bitcoin investment specialist in 2020, significantly increasing its corporate value.

However, as the prices of Bitcoin and Ethereum have recently fallen, the share prices of Strategy and other companies employing similar strategies have plummeted. Strategy’s market capitalization peaked at around 128 billion dollars in July, but has since dropped to 70 billion dollars.

There has long been skepticism in the market that the share prices of Crypto Treasury Companies are trading at higher prices than the value of their underlying assets. Brent Donnelly, CEO of market research firm Spectra Markets, said, “To me, the very concept of a crypto treasury company doesn’t make sense. It’s like buying a one-dollar bill for two dollars,” adding, “That premium is bound to shrink eventually.”

The prices of cryptocurrencies had been on a steady rise under the Donald Trump administration, which promoted pro-cryptocurrency policies. However, on October 10, when President Trump announced additional tariffs on China in response to China’s strengthened control over rare earth elements, a sell-off was triggered. In addition, the record-long U.S. government shutdown and uncertainty surrounding the Federal Reserve’s monetary policy also negatively affected cryptocurrency prices.

WSJ noted that most Crypto Treasury Companies are unlikely to face a crisis in the short term as long as the value of their cryptocurrency holdings is maintained. However, there are concerns that some companies may find it difficult to sell shares to purchase additional cryptocurrency, which could potentially exert downward pressure on cryptocurrency prices.