## Crypto Treasuries Lose Appeal: The Illiquidity Factor and ETFs Redefine Valuation Dynamics

The cryptocurrency treasury sector is undergoing a profound reevaluation. With an approximate market volume of 130 billion dollars, these companies, once considered practical ways for corporations to accumulate Bitcoin, are now under structural pressure that goes beyond price volatility. Recent data shows that retail investors have absorbed losses close to 17 billion dollars, reflecting how markets are radically revaluing these corporate holdings.

### Why the discount is now the natural state

According to investment specialists' analysis, the premium valuations that characterized companies like Strategy ( before MicroStrategy) and Metaplanet Inc. depended on assumptions that the market no longer supports. The fundamental change lies in three factors that continuously erode value:

**First, structural illiquidity.** Bitcoin held within a corporate treasury cannot be redeemed immediately by shareholders. There is a gap between legal ownership and direct access to the asset, and this friction automatically translates into a discount that the market incorporates into the price. It’s the cost investors pay for delayed or limited access.

**Second, ongoing operational expenses.** Maintaining a crypto treasury requires compensation, audits, custody services, and legal advice. These costs systematically erode the net asset value, meaning each dollar of corporate Bitcoin is intrinsically worth less than the same dollar held directly.

**Third, execution risk.** Management decisions, incorrect market assessments, or regulatory hurdles are real risks that markets discount in valuations. None of these probabilities are negligible.

These three elements form a baseline discount structure applied to most corporate treasury strategies. The critical point is that most reasons for operating at a discount are predictable and constant, while justifications for trading at a premium are uncertain and depend on specific events.

### The event that changed everything: the arrival of spot ETFs

Before Bitcoin and Ether ETFs gained regulation, corporate treasuries served as the only accessible entry point for institutions and retail investors seeking regulated exposure without the operational complexity of direct custody. This scarcity of options allowed certain treasury securities to trade well above the net value of their underlying assets.

The introduction of spot ETFs erased that advantage. World-class issuers like BlackRock Inc. and Fidelity Investments now offer products with minimal costs that directly replicate Bitcoin and ETH, with intraday liquidity and daily creation and redemption capacity. This market infrastructure eliminates the illiquidity barrier that previously justified valuation premiums.

Market analysts describe these ETFs as "corporate treasury exterminators," because they close the regulatory arbitrage that previously supported inflated prices. Treasuries now compete directly against products offering better tracking, lower costs, and more transparent access—all without the overhead of corporate management.

### Where they are heading: crypto per share and consolidation

With the premium model collapsed, the only way for a treasury to improve its valuations is to increase crypto volume per share. Only four levers have proven effective: issuing debt to acquire more crypto, lending assets to generate yield, implementing options strategies, or acquiring assets at a discount.

Debt issuance has historically been the most powerful tool. When credit markets are favorable and Bitcoin appreciates, shareholders can achieve higher cumulative gains. However, this strategy depends on timing, balance sheet health, and access to capital markets—factors not always controllable.

Asset lending, structured products, and options generate incremental returns but introduce counterparty risks. Mergers and acquisitions represent another strategic option: consolidating scale reduces financing costs and broadens commercial opportunities. According to specialized analysis, "scale matters" because larger companies access cheaper capital and better business opportunities.

Industry leaders predict an acceleration in sector consolidation. Treasuries that survive will evolve into operational companies that acquire private crypto businesses and generate operational income, rather than relying solely on treasury appreciation. Those unable to offset expenses or expand their crypto per share will likely trade at persistent structural discounts.

### The market message is clear

The sector’s re-pricing is already a reality. Data shows considerable dispersion: treasuries with high operational costs, limited scale, or execution issues have underperformed, while companies focused on expanding crypto per share maintain greater resilience.

The era when corporate balance sheets commanded automatic valuations is over. For sector players, the challenge is to transform from static balance sheet vehicles into operational businesses. As ETFs capture a larger share of institutional flows, the market signal is unequivocal: simply accumulating Bitcoin is no longer enough. A treasury must demonstrate value creation beyond its underlying holdings, or its valuation will reflect the pure arithmetic of its assets minus structural costs and risks.