Bitcoin slump shakes companies that jumped on crypto-hoarding bandwagon

Hannah Long

Feb 5 (Reuters) – Turmoil in the cryptocurrency market is dragging down the share prices of companies with Bitcoin and other digital assets on their balance sheets, raising concerns about potential broader stress in the industry.

Last year saw a surge in the number of public companies investing in cryptocurrencies in hopes of rising in value.

Many were encouraged by U.S. President Donald Trump’s crypto-friendly stance and inspired by the runaway success of billionaire Michael Thaler’s strategy, which started with software company MicroStrategy, and began buying and holding Bitcoin in 2020.

However, concerns about the valuation of artificial intelligence companies and uncertainty about the path of the Federal Reserve’s interest rate cuts are weighing on risk assets, pushing Bitcoin to its lowest level since November 2024 and leaving many “digital asset treasury” or DAT companies reeling.

Shares of Strategy, one of the most prominent Bitcoin buyers, have fallen from $457 in July to $111.27 on Thursday, the lowest level since August 2024. Strategy last traded down more than 11% on the day.

Strategy did not immediately respond to a request for comment.

In December, Strategy significantly cut its 2025 profit forecast, citing Bitcoin weakness, and announced plans to set up reserves to support dividend payments. The company said it expected full-year profit to be between $6.3 billion and $5.5 billion, compared with its previous forecast of net profit of $24 billion.

The stock price of British company Smarter Web, another Bitcoin buyer, was also hit hard on Thursday, falling nearly 18%. Shares of Bitcoin rivals Nakamoto Inc and Japan’s Metaplanet fell nearly 9% and more than 7% respectively.

Bitcoin has fallen nearly 20% since the start of the year, with selling pressure intensifying after Trump nominated Kevin Warsh as the next Federal Reserve chairman, which analysts said could lead to a shrinking of the Fed’s balance sheet, which would be detrimental to risky assets such as cryptocurrencies.

Bitcoin has erased all gains since the election of Trump, who promised on the campaign trail to overhaul digital asset policy. The world’s largest cryptocurrency was last trading at $67,651.

Nic Puckrin, investment analyst and co-founder of cryptocurrency analysis platform Coin Bureau, said: “As Bitcoin continues to fall below the psychological $70,000 mark, it is clear that the cryptocurrency market is now in full capitulation mode.”

“If previous cycles are anything to go by, this is no longer a short-term correction but a transition…and these typically take months, not weeks.”

The amount of other tokens stored by the company is also decreasing

While institutional investors can purchase tokens directly, DATs offer the opportunity to capitalize on returns and allow more cautious investors to gain cryptocurrency exposure through a regulated, public company.

Still, continued pressure on the stocks of crypto-funded companies could complicate the companies’ ability to raise additional capital to purchase more crypto tokens, which is key to their business models.

Many executives at these companies say their success will be rooted in their ability to make smart investment decisions and are looking for new ways to increase shareholder value, Reuters previously reported.

Shares of companies that have accumulated other crypto tokens also traded lower on Thursday. Alt5 Sigma, a company that announced last year that it would reserve the Trump family’s WLFI token, saw its shares fall 8.4%. SharpLink Gaming, which holds Ethereum, fell 8%, while Forward Industries, which holds solana, fell nearly 6%.

(Reporting by Hannah Long in New York; Editing by Nia Williams)