The corporate bitcoin treasury model, which for a long time served as a growth driver for the stocks of public companies, is showing a systemic failure. The mechanism, based on a self-sustaining financing cycle, no longer works: the securities of issuers are trading without a premium to the value of their BTC reserves, and capital raising is beginning to dilute the stakes of existing shareholders.
Institutional demand is weakening
An analysis of on-chain data points to a notable decline in institutional activity. Bitcoin holdings in funds have fallen from approximately 1.33 million BTC in May to 1.2 million BTC. This 10% drop over two months is a worrying signal that correlates with the degradation of the treasury model. Previously, the scheme worked flawlessly: shares of companies with BTC on their balance sheets were worth more than their crypto assets, allowing them to issue new shares or debt, buy more bitcoin, and maintain the premium. However, when the market capitalization falls below the net asset value, issuance begins to directly dilute investor stakes.
Additional confirmation of the weakness is the Coinbase premium index, which remains at a negative level of around -0.11. This means that demand in the U.S. spot market is still trading at a discount to offshore venues. At the same time, exchange flows do not show immediate capitulation: total BTC inflows to spot exchanges amounted to about 3,600 BTC, and to the ten largest platforms—approximately 2,200 BTC. Both indicators remain below long-term averages, which points more to a decline in purchasing power than to mass selling by large holders.
Risks remain high
A telling example is Strategy, which authorized the sale of BTC worth up to $1.25 billion after falling prices hit the digital treasury model. Earlier this year, the company had already sold approximately $218 million worth of bitcoin to cover dividends and replenish dollar reserves. A number of similar firms are trading below the value of their assets, depriving them of the ability to raise capital on favorable terms.
Citi experts cite ETF outflows and potential sales by treasury companies among the key constraints on market sentiment. A recovery of the demand mechanism is possible only with the return of a premium to corporate shares, growth in fund holdings, and normalization of the Coinbase index. However, the market remains in limbo: Fed Chair Lisa Cook recently stated readiness to raise rates amid inflation concerns, which adds uncertainty.
My view: The breakdown of the treasury model is not just a correction, but a paradigm shift. Investors no longer believe in the endless "borrow-buy-BTC" cycle, and companies will have to find new arguments to attract capital. Until fundamental indicators turn around, pressure on such securities will persist.