The month-long drop in cryptocurrency prices has not only hit major assets like Bitcoin (BTC) and Ether (ETH), but is also causing huge losses to digital asset treasury companies that built their business models around accumulating cryptocurrencies on their balance sheets.
That’s one of the key takeaways from a recent social media analysis by on-chain data company CryptoQuant, which cited XRP-focused treasury company Evernorth as a prime example of the risks in this sector.
Evernorth has reportedly experienced unrealized losses of around $78 million on its XRP position, just weeks after acquiring the asset.
The pullback has also hit shares of Strategy (MSTR), Bitcoin’s original treasury play. The company’s shares have fallen more than 26% over the past month as the price of Bitcoin has plummeted, according to data from Google Finance. CryptoQuant noted a 53% drop in MSTR stock from its all-time high.
However, Strategy still has a sizable unrealized gain on its Bitcoin reserves, costing an average of about $74,000 per BTC, according to BitcoinTreasuries.NET.
Meanwhile, BitMine, the largest Ether holding corporation, now has approximately $2.1 billion in unrealized losses tied to its Ether reserves, according to CryptoQuant.
BitMine currently holds nearly 3.4 million ETH, having acquired more than 565,000 over the past month, according to industry data.
Related: Ripple-Backed Evernorth Nears Launch of Publicly Traded XRP Treasury
Digital asset treasuries: echoes of the dotcom bubble
Digital asset treasury, or DAT, companies have come under increasing valuation pressure in recent months, with analysts warning that their market value is increasingly tied to the performance of their underlying cryptocurrency holdings.
Some analysts, including those at venture capital firm Breed, argue that only the strongest players will survive, noting that Bitcoin-focused Treasuries may be better positioned to avoid a potential “death spiral.” The risk, they say, arises from a collapse in companies’ market net asset value (mNAV), a metric that compares enterprise value to the market value of their cryptocurrency investments.
Others have compared the rise of digital asset treasury companies to the dotcom boom and bust of the early 2000s, a period driven by long-term visionaries and innovators, as well as opportunists seeking quick profits.
Ray Youssef, founder of peer-to-peer lending platform NoOnes, predicted that most digital asset treasuries will eventually fade or collapse as market realities set in.
Related: Few Bitcoin Treasury Firms Will Survive ‘Death Spiral’: VC Report
