Public companies that have invested heavily in cryptocurrencies are now facing significant financial losses. The once-promising investment strategy has caused stock prices to plummet, leaving companies grappling with the aftermath.
What happened: Companies that have converted their corporate money into Bitcoin (CRYPTO: BTC) or other digital tokens, inspired by Michael Saylor‘s Strategy Inc., have experienced a serious reversal of fortunes. Digital asset treasuries (DATs) were a popular trend in the first half of 2025, sending stock prices soaring.
One such company, SharpLink Gaming Inc.witnessed a stock surge of over 2,600% after announcing a shift towards buying Ethereum tokens. However, the stock has since fallen 86% from its peak, causing the company’s value to fall to less than its holdings of digital tokens.
Bloomberg reports that the average stock price of U.S. and Canadian publicly traded companies that switched to DATs has fallen 43% this year. The hardest hit were those who invested in smaller, more volatile tokens.
Analysts believe that the decline is due to the non-existent returns on these investments. “Investors looked and understood that there isn’t much return to be had from these holdings, rather than just sitting on this pile of money, and that’s why they signed contracts,” B. Riley Securities analyst Fedor Shabalin told the paper.
Also Read: JPMorgan Predicts a Low for Bitcoin, Expects a $28.3 Trillion Challenge for Gold by 2026
With most DATs’ crypto holdings failing to generate any cash flow, these companies are now finding it difficult to make interest and dividend payments on the debt they took on to purchase the tokens. This has resulted in a decline in investor enthusiasm and a decrease in the ability to raise capital.
Despite the recession, some DATs are considering acquiring smaller DATs worth less than their holdings, indicating potential future activity in this sector.
Why it matters: The demise of DATs underlines the risks associated with heavy investments in volatile assets like cryptocurrencies. Companies that jumped on the crypto wave, inspired by early successes, are now facing the harsh reality of a market downturn.
As these companies fail to generate returns and struggle to meet their debt obligations, these companies are facing a crisis of confidence among investors.
The potential for the acquisition of smaller DATs indicates that despite the losses, there is still some belief in the long-term potential of digital assets. However, the near future looks challenging for these companies.
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