Discussions surrounding Bitcoin’s price decline ought to encompass the influence of crypto treasury firms, which have played a part in the downturn, asserts Omid Malekan, a blockchain author and adjunct lecturer at Columbia Business School.
“Any evaluation of why crypto valuations continue to drop must incorporate DATs [digital asset treasuries],” Malekan expressed in a post on X on Tuesday. “Collectively, they proved to be a substantial extraction and exit episode — a factor causing prices to decline.”
He remarked that few firms have attempted to “establish sustainable value. Yet I can count them on a single hand.”
Experts have attributed the downturn in the crypto market to trade conflicts between the US and China, alongside various macroeconomic influences, with Bitcoin (BTC) fluctuating between $99,607.01 and $113,560 over the past week, trading down from its all-time high of above $126,000 on October 6, according to CoinGecko.
Companies’ Wrong Motivations Creating Issues
Numerous cryptocurrency purchasing firms successfully raised millions from investors seeking crypto exposure, and Malekan asserted that some individuals launching crypto treasury firms viewed the model “as a scheme to get rich quickly.”
“Establishing any type of public entity is costly,” he noted. “The funds needed for the shell/PIPE/SPAC soar into the millions, as do the fees given to all involved bankers and lawyers.”
“The funds expended on those fees needed to originate from some source,” he indicated.
Crypto treasury firms have been amassing a significant quantity of tokens across major cryptocurrencies, employing leverage through the sale of shares, convertible notes, and debt offerings, raising concerns that leveraged companies might intensify a market downturn by compelled liquidation of assets.
Others have sought to attract investors by generating returns on their holdings via methods like staking, while some have indicated plans to allocate part of their holdings into crypto protocols for lending and liquidity purposes.
“The most significant harm DATs caused to the overall crypto market cap was by creating a mass exit event for ostensibly locked tokens,” Malekan stated. “I remain astonished that so many other investors didn’t voice their discontent over this.”
He added, “raising too much capital and minting excessive tokens, even if locked or aimed at ecosystem growth, is the gangrene of crypto.”
Related: Are struggling firms utilizing crypto reserves as a public relations lifeline?
Crypto Treasury Phenomenon Surges in 2025
The quantity of crypto treasuries has surged dramatically this year, with an October report from asset manager Bitwise tracking 48 new instances of firms adding Bitcoin to their balance sheets, totaling 207 overall, which collectively hold over one million tokens valued at over $101 billion.
Concurrently, Ether (ETH), the second most widely adopted cryptocurrency for treasuries, has been included in the balance sheets of 70 companies, according to data from Strategic ETH Reserve. Together, they possess 6.14 million Ether, amounting to over $20 billion.
Experts shared with Cointelegraph that DATs will likely begin to consolidate under a few dominant entities as the cycle advances and firms aim to draw in investors, while others speculate that the trend will lead companies to broaden their reach into other sectors of Web3.
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