Bitcoin was among the best-performing assets of the year, reaching an all-time high of $123,640 in August. But the trajectory in the second half of the year has been more challenging for the world's largest cryptocurrency: since then, it has accumulated a 27% drop and is now trading near $90,000.
This movement deepens the pressure on companies with treasuries exposed to the asset, which are seeing the value of their balance sheets shrink amid recent volatility. According to data from The Block, listed companies that define themselves as "bitcoin treasuries" have accumulated losses close to US$62 billion in market value in recent months.
The largest representative of the class, Strategy, led by Michael Saylor, was responsible for US$50 billion of the losses, with the company's shares falling by about 50% during the period. With 649,870 bitcoins in cash, Strategy is by far the most exposed company to this cryptocurrency, holding almost seven times the amount held by the second largest in the segment, also American, Mara, with 53,250 bitcoins.
So-called "bitcoin treasury companies" are companies that have adopted the accumulation of bitcoin as a core business strategy, functioning, in practice, as a "leveraged" form of exposure to the asset. This is because they can, at least in theory, issue debt and raise capital in the market to expand their positions beyond their available cash.
With Bitcoin's strong rise in recent years, this model has attracted investors seeking increased returns, and the asset class has gained traction as an alternative to profit even more from the cryptocurrency's appreciation. A pioneer in this thesis, Strategy has seen its market value multiply 14 times since it decided to abandon its original software business to position itself as a Bitcoin accumulator.
According to data from BitcoinTreasuries, 209 listed companies hold bitcoin in their treasuries — although not all, such as Tesla and Mercado Libre, define themselves as bitcoin treasury companies. These companies hold approximately 1.06 million bitcoins, equivalent to US$95 billion at the current exchange rate, and just over 5% of all bitcoins ever issued.
But with Bitcoin falling, questions are growing about the solidity of the business model, since, in an extreme scenario, these companies would need to sell Bitcoin to pay off debts. However, at least for now, some are taking advantage of the downturn to increase their exposure to the asset.
Even with its stock price falling, Strategy announced this month the purchase of 8,665 bitcoins. The company claims to have spent approximately US$890 million on the acquisition. However, within a few days, the investment had depreciated by US$100 million.
Those involved in this game, however, are convinced that the price of bitcoin can still rise significantly, with predictions that the asset could even reach US$1 million being common.
Supported by this expectation, another bitcoin treasury that took the opportunity to increase its exposure to the asset was OranjeBTC . The company, which has the largest bitcoin reserve in Latin America, reported having purchased 12.3 bitcoins in November. Unable to secure new loan agreements at attractive rates, the company states that the acquisitions were financed by the sale of shares.
Although it made marginal purchases within a portfolio of 3,700 bitcoins, the scope for the company to continue with this strategy is practically nil. This is because, as happened with Strategy and other bitcoin treasuries abroad, its devaluation was much greater than that of bitcoin, reducing the attractiveness of issuing shares to buy the cryptocurrency.
Since its listing on the B3 stock exchange, OranjeBTC has accumulated a 54% drop in value, while Bitcoin fell by 27% during the same period . In October, the company's value was even lower than its Bitcoin holdings, forcing it to sell Bitcoin to buy back shares. Today, that ratio is one to one.
Another Brazilian bitcoin treasury, Méliuz, has also felt the same effect, falling 44% since the beginning of the semester, compared to 27% for bitcoin. Its market value, however, is still 22% higher than its reserves.
In the market, the difference between the market value of bitcoin treasury holdings and the value of their reserves is measured by the mNav indicator. When this ratio falls below 1, it becomes practically impossible for the company to continue buying bitcoin without increasing its debt. This, however, has become the most common scenario, with the devaluation of bitcoin treasury holdings exceeding the fall in the asset itself.
According to BitcoinTreasuries, 31 publicly traded companies are worth less than their bitcoin holdings. The list includes four of the five largest bitcoin holders: the American companies Strategy, Mara, Bitcoin Standard Treasury Company, and the Japanese company Metaplanet.
Among the few analysts covering this thesis in Brazil, Itaú stated in a recent report that, as the thesis matures, the mNav trend for these companies is likely to hover around 1. "It's a natural challenge of the business," they said. "It's a business that will only succeed if bitcoin prices increase."
