When BTC treasury companies fall into a sell-off cycle, low-quality companies may emerge as the final winners

2025.11.18

When BTC treasury companies fall into a sell-off cycle, low-quality companies may emerge as the final winners

Middle-layer players may suffer the greatest losses.

2025.11.18 - 09:24:46

DAT

Navigating Web3 tides with focused insights

Middle-layer players may suffer the greatest losses.

Author: Cheshire Capital

Translation: TechFlow

I want to speculate on the potential development path of BTC Treasury Companies (TC) over the next 6 to 12 months:

Initial Phase: 10 different treasury companies hold Bitcoin and trade at varying mNAV levels (ranging from 1.0x to 5.0x), with Bitcoin priced at $120,000. These companies vary in quality (defined by treasury size and leadership conviction and marketing ability).
Low-quality companies begin selling: Some low-quality Bitcoin treasury companies start falling below 1.0x mNAV. For companies whose leaders are not strong Bitcoin believers (unlike Michael Saylor), the logical choice becomes selling Bitcoin to repurchase shares, which has a short-term accretive effect (reducing shares outstanding proportionally more than the decline in net assets). These companies can sell part of their Bitcoin holdings at $120,000.
Bitcoin price drops to $115,000 (now fluctuating around $90,000): Due to the selling in step 2, Bitcoin's price begins falling to $115,000. Several other Bitcoin treasury companies, including those that previously conducted buybacks, begin trading at lower mNAV multiples due to the negative correlation between Bitcoin price and mNAV. Another 4 to 5 companies choose to sell Bitcoin for share repurchases, able to do so at $115,000.
Market confidence shaken: The market realizes that 8 to 9 out of the 10 Bitcoin treasury companies are actually short-term capital, more focused on near-term shareholder returns than long-term Bitcoin accumulation. The market starts anticipating that these companies may need to sell 30%-50% of their Bitcoin reserves (after all, even MicroStrategy fell to about 0.5x mNAV at its 2022 low). Bitcoin rapidly adjusts to $100,000, and most BTC treasury companies fall below 1.0x mNAV.
Mid-tier companies under increasing pressure: Mid-quality crypto treasury companies that previously hesitated to sell now face pressure from markets and shareholders to act in defense of their mNAV. Selling accelerates, with $500 million to $1 billion in Bitcoin sell orders entering the market weekly. Even high-quality firms (such as MicroStrategy, 3350, XXI) struggle to support prices with buy orders, and Bitcoin falls to $90,000.
Full collapse: The entire Bitcoin treasury company ecosystem, including high-quality firms, now trades below 1.0x mNAV. MicroStrategy's preferred shares drop to 70 cents on the dollar, and rumors circulate that Saylor might suspend dividends. Some companies previously seen as committed HODLers (like 3350, XXI) begin selling Bitcoin to cover operating costs, sending Bitcoin crashing to $80,000.
Low-quality companies exit, selling intensifies: By this point, most low-quality Bitcoin treasury companies have nearly fully liquidated their Bitcoin reserves, and early "catching the falling knife" behavior emerges. However, the danger of this reflexive cycle is that as the scale and speed of selling grow, mid-to-high quality companies also begin capitulating en masse. The largest Bitcoin positions start hitting the market, with weekly sales reaching $1.5–3 billion. Note that non-MicroStrategy BTC treasury companies collectively hold about 350,000 BTC—roughly $40 billion at current prices. If MicroStrategy is forced to join, such selling could persist for a significant duration and be far more brutal. Bitcoin ultimately falls to $70,000.

If the above scenario unfolds, possible outcomes include:

Low-quality Bitcoin treasury companies may end up profiting the most: Because they will be the first "forced" to sell Bitcoin. In reality, selling means these companies have already stopped playing the treasury company iteration game and shifted to maximizing value in a single move. However, even a single sale destroys their reputation as "diamond-handed" treasury firms, significantly reducing future capital inflows.
Diamond-handed Bitcoin treasury companies may ultimately prevail: If you believe Bitcoin remains an asset with a 30–40% annual compound growth rate (CAGR) (I do!), then companies that hold through turbulence will ultimately survive. Currently, I think only Michael Saylor will go to extreme lengths to protect his Bitcoin, though there may be other candidates (e.g., 3350, NAKA). Still, no treasury company is worth long-term optimism until the bulk of selling concludes.
Mid-tier players may suffer the greatest losses: These firms are typically neither dominant "sharks" nor strongly convicted, yet also not true Bitcoin believers (e.g., MARA, RIOT, SMLR). In the above scenario, they might sell Bitcoin during phases (6) to (7), averaging around $75,000 per coin.
Situation with treasury companies holding other assets: The same logic applies to treasury companies holding other assets, with one exception: the presence of duopoly or oligopoly structures in certain asset markets. For example, Ethereum (ETH) currently fits this condition—BMNR and SBET hold 75% of all ETH owned by treasury companies (and with DYNX and BTBT included, the figure reaches 90%). This concentration allows for some degree of coordination or "collusion" to avoid price collapses triggered by selling. While such agreements may eventually break down, higher asset concentration increases the likelihood of sustained coordination.
Traditional finance parallels: The clearest traditional finance analogy is the behavior of bank syndicates during Bill Hwang’s Archegos blow-up. Aggressive firms that acted quickly (like Goldman Sachs, Deutsche Bank) performed far better than slower ones attempting orderly liquidation (like Credit Suisse, Nomura).