The business model of listing companies on the stock exchange to raise funds to buy cryptocurrencies, known as Digital Asset Treasury Company (DAT), is facing a major crisis as investors lose confidence due to the prolonged sharp decline in crypto values.
This impact has pressured many companies awaiting market entry through mergers with SPACs—special purpose acquisition companies created solely to acquire other businesses and take them public—amid severely unfavorable market conditions.
The DAT concept began in 2020 with Michael Saylor, who transformed software company MicroStrategy into one focused primarily on buying and holding Bitcoin, now renamed Strategy.
This approach was highly successful at one point, with the company's stock price soaring above $500 per share, driven by Bitcoin's surge; in 2025, Bitcoin reached an all-time high of $126,198 per BTC.
Following this, numerous companies such as BitMine, Metaplanet, Twenty One Capital, and SharpLink adopted the same strategy in 2024 and the following year, establishing Crypto-Treasury firms holding crypto assets on their balance sheets.
However, currently, Strategy's shares close around $112 per share, while Bitcoin has dropped about 50% from its peak last October, causing companies emulating Saylor's model to face serious difficulties.
A key case is ReserveOne Inc., a digital asset management firm involving prominent figures, including former U.S. Commerce Secretary Wilbur Ross, who was connected to the deal.
ReserveOne had agreed to merge with M3-Brigade Acquisition V Corp., a SPAC, but the $1 billion deal ultimately fell through after some major ReserveOne investors demanded its cancellation.
Although Wilbur Ross did not directly invest in the deal, he was slated to join ReserveOne's board if the merger succeeded, and the deal's promoters were all well-known figures in finance and crypto circles.
Bloomberg reports that the investor group pushing to cancel the deal believed ReserveOne's shares would inevitably trade below their net asset value (NAV) if it went public.
The main reason was the significant decline in Bitcoin and other crypto prices since the deal's announcement nearly a year earlier; combined with fees payable to advisors and deal sponsors, investors saw the transaction as no longer worthwhile.
ReserveOne's case is not isolated but reflects challenges facing DAT companies attempting SPAC listings at this time.
Many companies with similar plans have had to cancel deals, failed, or performed poorly amid a severe downturn in the crypto market.
One example is Avalanche Treasury Corp., which merged with the SPAC Mountain Lake Acquisition Corp. on 11 June; after going public, its shares were heavily sold off.
Avalanche Treasury's stock price has fallen nearly 90% since shareholder approval of the merger, dropping to about 85 cents per share last Thursday.
Jan-Philip Grabs, a partner at digital asset advisory firm Areta, said the DAT model became ineffective once fundraising via new share issuance to buy crypto resulted in dilution harming existing shareholders.
Many DAT companies have tried to explain that in the long term they are not just crypto holders but also plan other operations such as payment services or business activities that create additional value.
However, he views this bear market as a crucial test for the industry, stating, “We believe this bear market will be a major filter. Some companies will use this time to build real business models and acquire value-adding assets, while others will remain mere financial instruments without underlying businesses and will struggle to survive if crypto prices remain depressed.”
Alexander Blume, CEO of crypto management firm Two Prime, commented, “In the long run, only companies with actual operations in the digital asset industry will succeed. DAT companies merely copying Michael Saylor’s formula will face increasing difficulties.”
Another clear example is the April cancellation of a $1.5 billion deal between The Ether Machine Inc. and Dynamix Corp., originally aimed at creating a major Ether holding company.
As part of the cancellation agreement, Dynamix was entitled to $50 million in compensation per regulatory filings, while Andrew Keys, co-founder of The Ether Machine, emailed investors stating, “Current market conditions make it impractical to proceed with this transaction.”
Many other Crypto-Treasury companies trying to enter the market via SPACs are in uncertain positions due to drastic changes in the economy and financial markets.
According to Bloomberg citing Artemis, publicly listed DAT companies have lost over $62 billion in combined market value from Bitcoin's peak in October until early June this year.
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