Why the Bitcoin Treasury Model Is Failing While Strategy’s Remains Stable

Why the Bitcoin Treasury Model Is Failing While Strategy’s Remains Stable

The Rise and Challenges of the Bitcoin Treasury Model

By 2025, the Bitcoin treasury model, once celebrated as a groundbreaking corporate reserve strategy, has encountered significant obstacles. More than 250 entities—including public companies, private firms, ETFs, and pension funds—have incorporated Bitcoin into their balance sheets. This movement gained momentum following Michael Saylor’s pioneering decision in 2020, when Strategy (formerly MicroStrategy) became the first major company to adopt Bitcoin as a corporate reserve asset. Initially embraced as a hedge against inflation, the model quickly evolved into a financial framework for a new generation of Bitcoin-holding companies, some structured to function similarly to quasi-ETFs.

However, as the model has matured, it has come under increasing strain. The fundamental premise is straightforward: raise capital, convert it into Bitcoin—a cryptocurrency with a capped supply—and hold it for long-term appreciation. Yet Bitcoin’s well-known price volatility exposes these companies to considerable risk. When a company’s stock price approaches or falls below the value of its Bitcoin holdings—measured by the Bitcoin-per-share metric or net asset value (NAV)—investor confidence can rapidly deteriorate. The multiple of NAV (mNAV) indicates how the market values a Bitcoin-holding company relative to its BTC reserves. The disappearance of this premium can trigger what is known as a “NAV death spiral.”

A recent report from Breed VC details the mechanics of this spiral: a sharp decline in Bitcoin’s price reduces NAV, limits access to new capital, and may compel distressed companies to liquidate Bitcoin holdings in a falling market, thereby accelerating the downturn. Companies that depend heavily on equity or debt financing are especially vulnerable. If loans mature or margin calls are triggered, forced sales can further depress Bitcoin’s price, potentially causing cascading failures throughout the sector.

Analyst James Check highlights that newer entrants to the Bitcoin treasury model are struggling to establish themselves, particularly without a distinct strategic focus. The long-term viability of this approach is increasingly uncertain for latecomers, who face intensified competition and less favorable market dynamics.

Strategy’s Enduring Position Amid Sector Turmoil

Despite these widespread challenges, Strategy remains the most prominent and resilient participant in the Bitcoin treasury space. The company has resumed Bitcoin acquisitions after a brief hiatus, reaffirming its commitment to the treasury model. Nonetheless, Strategy confronts its own difficulties, including a $5.9 billion lawsuit related to Bitcoin losses and complications arising from evolving accounting standards for crypto assets. Still, its disciplined strategy and ongoing accumulation of Bitcoin have enabled it to maintain relative stability while many others falter.

Most Bitcoin treasury companies in 2025 continue to rely primarily on equity financing rather than excessive leverage, which helps mitigate systemic risk. While shareholder losses are probable, the risk of widespread contagion remains contained. However, a shift toward aggressive borrowing could elevate the stakes considerably. Should highly leveraged entities be forced to unwind positions, the resulting market stress could undermine confidence in the Bitcoin treasury model over the long term.

As the sector evolves, survival will likely depend on maintaining a strong mNAV premium and consistently increasing Bitcoin-per-share holdings. Companies unable to meet these criteria may face acquisition or collapse, driving further consolidation within the industry. While the future of the Bitcoin treasury model remains uncertain, Strategy currently stands out as a resilient, albeit embattled, leader in a sector under considerable strain.