The digital asset warehouse is facing increased financial stress after Bitcoin and Ethereum dropped nearly 30% within a week, resulting in an unrealized loss of about 25 billion USD in the digital asset balance sheet.
Data tracking digital asset custody firms on the stock market shows that no firm currently holds assets above the average cost. This sudden downturn has pushed most custody strategies into losses simultaneously, raising concerns about liquidity, finance, and long-term survival.
The sell-off has impacted companies with heavy asset holdings simultaneously.
Major holders are recording the largest unrealized losses, leading to a total unrealized profit and loss figure that has turned sharply negative. Even if it is just unrealized losses, the scale of it matters as it weakens the balance sheets and stock values of the companies.
As a result, the market has shifted from rewarding crypto accumulation to assessing survival risk instead.
Market price spreads have plummeted.
A key stress signal is the decline in net asset value in the market (mNAV), which compares a company's stock price to the value of the crypto assets it holds.
Many large asset custody companies are currently trading below an mNAV of 1, meaning the market is valuing their stocks below the assets the companies hold. Such assessments make raising additional funds through stock issuance challenging, as it dilutes shareholder proportions.
MicroStrategy, one of the largest corporate holders of Bitcoin, is trading below asset value, even while holding crypto assets worth tens of billions of USD.
Such discounts limit the flexibility of companies in raising funds for additional purchases or refinancing at lower costs.
Just unrealized losses do not cause bankruptcy. The risk increases when falling asset prices collide with debt obligations, loan agreements, or ongoing cash flow losses.
Mining companies and asset holders relying on external funding sources face the highest risks. If crypto prices continue to decline, lenders may tighten conditions, capital markets may remain closed, and refinancing options may diminish.
This will create a feedback loop. As prices fall, stock values drop, resulting in less access to capital and increased pressure on financial positions.
The period of facing pressure is not a collapse.
This decline reflects a reduction in debt burden and stricter financial conditions, rather than a failure of the crypto assets themselves.
However, if prices do not recover and capital markets remain tight, tensions are likely to escalate.
Currently, crypto firms still have liquidity, but the margin for error is narrowing rapidly.
