Luisa Crawford
Sep 29, 2025 13:25
The Crypto Treasury Phenomenon: Echoes of the Dotcom Era’s Dangerous Dance
The Crypto Treasury Phenomenon: Echoes of the Dotcom Era’s Dangerous Dance
The proliferation of crypto treasury companies is akin to the dotcom era of the early 2000s, which saw internet stocks crash the economy. This stark warning has taken on new urgency as hundreds of publicly traded companies rush to transform themselves into digital asset accumulators, creating a pattern that financial historians recognize all too well.
When hundreds of firms adopt the same one-directional trade (raise equity, buy crypto, repeat), it can become structurally fragile. The crypto treasury model has exploded in 2025, with Twenty One, created by SoftBank and Tether, launched via a Cantor Fitzgerald SPAC with $685 million in capital to buy bitcoin. and Nakamoto, founded by Bitcoin Magazine’s David Bailey, merged with a publicly traded medical firm, raising $710 million to buy bitcoin.
The scale of this phenomenon is staggering. Digital Asset Treasury Companies (DATCOs), which now account for over $100 billion in digital assets, depend on a persistent equity premium to net asset value (NAV). CoinGecko tracks 120 institutions holding 1,510,408 BTC worth $165 billion, representing 7.19% of Bitcoin’s total supply. These companies have created a new class of publicly traded vehicles that function more as leveraged crypto bets than traditional operating companies.
The Premium Trap: A Familiar Pattern Emerges
The mechanics of this bubble mirror the dotcom era with alarming precision. A high premium (recently averaging 63% for Ethereum-focused firms) reflects optimistic growth expectations but also indicates speculative froth. As long as new investors buy the stock at a premium, the company can raise money (harvesting those investor funds) to buy more crypto, boasting outsized yields not from operations but from continuous fundraising.
This self-reinforcing cycle creates systemic vulnerabilities. Put another way, the firm is trading for 1.7x the value of its bitcoin. in the case of Strategy, which holds 580,250 bitcoin worth $60 billion, but has a market capitalization of $102.4 billion. The parallels to the dotcom bubble are unmistakable: A combination of rapidly increasing stock prices in the quaternary sector of the economy and confidence that the companies would turn future profits created an environment in which many investors were willing to overlook traditional metrics, such as the price–earnings ratio, and base confidence on technological advancements, leading to a stock market bubble.
Operational Realities Behind the Hype
The fundamental weakness of many crypto treasury companies lies in their operational profiles. Strategy announced a $9.5 billion gain on its Bitcoin holdings for Q2 2025. However, the firm saw negative operating cashflows (-$34.9 million) during the time. This disconnect between paper gains and operational reality creates dangerous dependencies. This means no underlying cash flow to support the business if crypto winter arrives. If market sentiment cools, they could struggle to raise fresh capital while still needing to serve their dividend obligations. In extreme cases, treasury-heavy firms could be forced to liquidate holdings to service debt.
Warning Signs from Market Veterans
The GBTC collapse provides a chilling preview of potential outcomes. After trading at a premium as the bull market of 2021 kicked off, GBTC’s discount to NAV peaked in late December 2022 at nearly 50%. This dramatic reversal trapped leveraged investors and triggered cascading liquidations across the crypto ecosystem. In a leaked investor call in June 2022, it was reported that BlockFi had loaned 3AC $1 billion dollars. with The remaining third were in shares of GBTC, worth a total of ~$430 million at the time of liquidat[ion]
Leverage Upon Leverage: The Hidden Accelerant
It clearly shows how much leveraged money was pouring into the market. The peak was $300 billion in 2000’s dollars, which equates to $500 billion today. It’s worth noting that margin debt not only peaked in March 2000, but so did the NASDAQ and the amount of Venture capital. The simultaneous peak of these three factors preceded the dotcom crash, a pattern that current market observers find disturbingly familiar.
The International Dimension
The crypto treasury phenomenon has gone global, adding complexity to potential unwind scenarios. Metaplanet CEO Simon Gerovich announced that the firm aims to reach 10,000 Bitcoins by the end of 2025. Currently, Metaplanet is Asia’s largest publicly traded Bitcoin holder. In May 2025, Méliuz received shareholder approval to create the first Bitcoin treasury in Brazil. This international adoption creates interconnected risks across multiple jurisdictions and regulatory frameworks.
Conclusion: History’s Rhyme Scheme
Investor psychology has not changed in the ensuing 25 years since the dotcom-era bust that took down the US stock market in the early 2000s. Ray Youssef, founder of NoOnes, observes that “Dotcoms were an innovative phenomenon of the emerging IT market, alongside major companies with serious ideas and long-term strategies, the race for investment capital also attracted enthusiasts, opportunists, and dreamers, because bold and futuristic visions of the future are easy to sell to the mass[es]”
The crypto treasury boom represents a dangerous confluence of speculative excess, operational weakness, and systemic leverage. While some disciplined operators may weather future storms through careful treasury management and genuine business operations, the broader phenomenon shows all the hallmarks of a bubble approaching its terminal phase. A downturn in any of these three variables (investor sentiment, crypto prices, and capital markets liquidity) can start to unravel the rest, creating conditions for a cascade of failures reminiscent of the dotcom collapse.
For investors, the implications are clear: when NAV premiums become detached from fundamental value, when companies with no operational profits trade at massive premiums to their holdings, and when leverage compounds upon leverage, the outcome rarely deviates from historical precedent. The crypto treasury phenomenon may yet prove to be this decade’s answer to the dotcom bust—a cautionary tale of innovation transformed into speculation, waiting for the inevitable moment when market gravity reasserts itself.
Image source: Shutterstock
Source: https://blockchain.news/news/crypto-treasury-companies-pose-a-similar-risk-to-the-2000s-dotcom-bust-(deleted)
