From Skyrocketing Gains to Massive Losses: The Rise and Fall of Public Companies’ Crypto Bets

Public companies that aggressively invested in cryptocurrencies earlier this year have suffered severe reversals, with some stocks plummeting as much as 86% after initial astronomical gains exceeding 2,600%. This stunning collapse highlights the increasing risks and volatility associated with corporate digital asset treasuries (DATs) amid fluctuating crypto markets.

At the start of 2025, a wave of public companies embraced cryptocurrencies as a core treasury strategy, converting substantial portions of their corporate cash reserves into digital assets such as Bitcoin and Ethereum. Inspired by high-profile advocates like Michael Saylor, these firms viewed crypto holdings as a vehicle for outsized returns amid a surging market. One striking example is SharpLink Gaming Inc., whose stock price skyrocketed over 2,600% following its announcement to acquire Ethereum tokens across the year.

However, this bull run abruptly collapsed. SharpLink Gaming’s share price nosedived by approximately 86% from its peak, eroding the company’s market value to below its own crypto token holdings. This dramatic downturn was mirrored broadly, with the median stock price of U.S. and Canadian-listed DAT companies falling nearly 43% during 2025, according to Bloomberg analyses.

The most vulnerable were those heavily invested in smaller, less liquid tokens, which exhibited extreme volatility. As these digital asset treasuries saw no tangible yield amidst the downturn, many firms struggle with investor confidence and meeting debt obligations, further exacerbating share price declines.

Despite the current distress, some DATs are exploring acquisitions of smaller, undervalued digital asset treasuries in a strategic attempt to consolidate their holdings at discounted valuations. This suggests a cautious optimism about the long-term prospects for cryptocurrencies despite near-term setbacks.

Key Drivers Behind the Decline

• The sharp correction in major cryptocurrencies, including Bitcoin dipping from a mid-2025 peak of about $126,000 to roughly $93,000 in early December, directly impaired the market value of corporate crypto reserves.
• Companies whose average cost basis for Bitcoin was substantially higher have seen considerable unrealized losses, straining balance sheets and liquidity.
• Mounting skepticism among investors regarding the sustainability and prudence of using volatile crypto assets as corporate treasury reserves has weighed heavily on share prices.

Case Study: Strategy Stock’s Bitcoin Exposure

One prominent example is Strategy, a company holding roughly 650,000 bitcoins—over 3.1% of Bitcoin’s total supply—valued at an average cost of approximately $74,400 each. Despite Bitcoin’s recent price decline, the company’s holdings still reflect significant unrealized gains, albeit with a reduced cushion compared to earlier in the year.

Investors are nevertheless concerned about the possibility of forced asset sales if debt pressures intensify, which could have wider implications for Bitcoin itself. Current valuations leave Strategy not technically underwater but less financially flexible, underscoring the delicate balance between high risk and high reward in crypto treasury management.

Market Implications and Outlook

The meteoric rise followed by steep declines in crypto investments among public firms embody the volatile nature of digital assets and caution about their integration into corporate finance. Analysts warn that companies heavily exposed to such volatility might face protracted difficulties unless crypto markets regain stability and regulatory clarity.

Nevertheless, the propensity for some acquisitions within the DAT ecosystem signals potential for future market restructuring and consolidation. While immediate challenges abound, selected corporate entities appear to maintain faith in the technological and economic potential underlying cryptocurrencies.

As the year closes, the crypto treasury strategy serves as a poignant case study of the interplay between bold innovation and market risk, highlighting lessons for investors and corporations alike.