Galaxy Digital "Bitcoin treasury hits its limits… some may disappear"

A negative analysis has emerged regarding digital asset treasuries (DAT) that incorporate Bitcoin (BTC) as corporate financial assets.

On the 6th (Korean time), according to crypto-focused media Cointelegraph, Galaxy Digital warned in a report that "DATs are entering a 'Darwinian evolution' phase." Darwinian evolution refers to natural selection, meaning that in competition some companies disappear while others survive.

The report stated, "The deleveraging event on October 10 sharply reduced initiated trades in the futures market and weakened the depth of the spot market," and added, "As a result, the core mechanism of DATs' business models is collapsing, causing stock premiums to plunge and leverage to shift into decline." It went on to say, "Currently, Bitcoin's price has fallen below these DATs' average purchase price of $107,000, exposing them to large losses."

Indeed, recently DAT companies' share prices have been weak. The previous day, leading DAT company Strategy fell 3.77% intraday. In addition, Bitmine (-6.22%) and Sharplink Gaming (-3.94%) also closed the prior day weak.

Galaxy presented three scenarios going forward. The first is a prolonged period of premium compression, with a larger decline relative to Bitcoin. The second is that highly indebted companies or those that bought Bitcoin near the top face asset liquidity pressure, leading to restructurings or mergers and acquisitions. The third is that Bitcoin records a new all-time high and recovers. However, the report explained that this would only be possible for companies that maintain liquidity and avoid excessive issuance.