Feb. 5 (GeokHub) — A sharp downturn in cryptocurrency markets is weighing heavily on publicly listed companies that loaded their balance sheets with bitcoin and other digital assets, reigniting concerns about financial strain across the emerging “crypto treasury” sector.
The number of listed firms holding cryptocurrencies surged last year, as executives sought to emulate the outsized gains achieved by early adopters who treated bitcoin as a long-term reserve asset. That enthusiasm was fueled by expectations of a more accommodating U.S. policy environment for digital assets and optimism around sustained price appreciation.
Those bets are now being tested.
Bitcoin has fallen nearly 20% since the start of the year, sliding to its lowest level since late 2024 as broader risk appetite weakened. Concerns over elevated valuations in artificial intelligence stocks, coupled with uncertainty around the pace of U.S. interest-rate cuts, have prompted investors to pull back from riskier assets — cryptocurrencies among them.
Crypto Treasury Firms Under Pressure
Shares of Strategy, one of the most prominent corporate bitcoin holders, have dropped sharply from mid-year highs, hitting their lowest levels in months and extending losses during Thursday’s session. The company previously warned that sustained weakness in bitcoin prices could significantly widen the range of its expected earnings outcomes and has taken steps to shore up liquidity.
Other companies following similar crypto-heavy balance sheet strategies also saw steep declines. UK-listed Smarter Web Company slid sharply, while U.S. and Japanese firms with significant bitcoin exposure also traded lower.
The selloff has not been limited to bitcoin-focused firms. Companies holding alternative digital tokens such as ether and solana also came under pressure, reflecting a broader retreat from crypto-linked equities.
Market Signals and Policy Uncertainty
Selling pressure intensified after renewed focus on U.S. monetary policy direction, including expectations that the Federal Reserve could maintain tighter liquidity conditions for longer. Analysts have noted that a smaller central bank balance sheet environment is typically unfavorable for speculative assets.
Bitcoin has now erased all gains made following the U.S. election cycle, undermining confidence among investors who had expected policy shifts to provide near-term support for digital asset prices.
Market watchers say the current phase resembles past crypto downturns that extended over several months rather than brief pullbacks, suggesting continued volatility ahead.
Risks to the Business Model
Unlike institutional investors that can directly hold cryptocurrencies, crypto treasury firms offer public-market exposure to digital assets through regulated equities. However, sustained declines in share prices could limit these firms’ ability to raise capital — a core pillar of their growth strategy.
Executives across the sector have increasingly emphasized diversification, disciplined capital allocation and alternative revenue strategies as they seek to reassure investors amid heightened scrutiny.
