Crypto Treasury Companies Pose a Similar Risk to the 2000s Dotcom Bust

The New Digital Gold Rush: How Crypto Treasury Companies Mirror the Dotcom Era

The explosive growth of crypto treasury companies in 2025 bears an unsettling resemblance to the investment trusts of the 1920s and the dotcom fever of 1995-2000. The proliferation of crypto treasury companies is akin to the dotcom era of the early 2000s, which saw internet stocks crash the economy. As hundreds of publicly traded companies pivot to accumulating digital assets, market observers are warning that history may be repeating itself with potentially devastating consequences for investors.

The crypto treasury phenomenon has reached a crescendo in 2025, with Twenty One, created by SoftBank and Tether, launched via a Cantor Fitzgerald SPAC with $685 million in capital to buy bitcoin. Nakamoto, founded by Bitcoin Magazine’s David Bailey, merged with a publicly traded medical firm, raising $710 million to buy bitcoin. These companies follow the playbook established by Strategy (formerly MicroStrategy), which began BTC accumulation in 2020 and now holds over 580,000 bitcoin worth $60 billion, yet trades at a market capitalization exceeding $100 billion.

The Mechanics of a Modern Bubble

The parallels to the dotcom era are striking. 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. Between 1995 and 2000, the Nasdaq Composite stock market index rose 400%. Today’s crypto treasury companies exhibit similar characteristics, with many trading at substantial premiums to their net asset value (NAV) despite minimal operating businesses or revenue streams.

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). This premium creates a self-reinforcing cycle: companies issue new shares at inflated prices, use the proceeds to buy more cryptocurrency, which theoretically increases the value per share, attracting more investors and pushing the stock price even higher.

Warning Signs From Industry Veterans

Nic Carter, partner at Castle Island Ventures, compared these publicly traded investment vehicles to GBTC, which had for years traded at a premium. The flipping of that premium to a discount precipitated the 2022 collapses of key crypto firms and projects like Terra/Luna, Three Arrows Capital, Voyager, Celsius, BlockFi, and of course FTX. The structural fragility of this model becomes apparent when examining the interconnected risks.

“When hundreds of firms adopt the same one-directional trade (raise equity, buy crypto, repeat), it can become structurally fragile. A downturn in any of these three variables (investor sentiment, crypto prices, and capital markets liquidity) can start to unravel the rest,” said the report. This warning from Galaxy Digital echoes concerns about systemic risk building within the cryptocurrency ecosystem.

The Race to Accumulate

The scope of the treasury movement has expanded far beyond bitcoin. There are crypto treasury firms, such as Sharplink Gaming for ether and DeFi Development Corp. for solana, and companies betting on extremely new cryptocurrencies, like the fitness firm Interactive Strength, which is buying the artificial intelligence coin from Fetch.ai. This diversification into increasingly speculative assets mirrors the late stages of the dotcom bubble when investors poured money into any company with a “.com” suffix.

James Butterfill, the head of research at CoinShares, a digital asset-focused investment firm, tells Axios this crypto treasury theme could be the real altcoin season in this cycle. Butterfill calls the situation a “liquidity shift.” There’s plenty of money sloshing around, looking to go to work, some of it in a very meme stock mood, he notes.

Leverage and Systemic Risk

An unwind in the DATCO trade could exert significant downward pressure on digital asset prices themselves. In the same way that inflows from treasury companies have served as a “persistent bid” for bitcoin, outflows driven by redemptions would likely have the opposite effect.

Historical Echoes and Market Psychology

The Echo of Excess: How Crypto Treasury Companies Mirror the Dotcom Era’s Dangerous Precedents

The current surge in crypto treasury companies is creating striking parallels to the dotcom bubble that devastated equity markets in the early 2000s. As corporate giants race to accumulate Bitcoin, Ethereum, and other digital assets, market observers warn that investor psychology has remained remarkably unchanged since the technology stock collapse that wiped out approximately 80% of stock market value a quarter-century ago.

Digital Asset Treasury companies (DATs) have emerged as a defining feature of the current crypto cycle, raising capital through share sales and debt to fuel massive cryptocurrency acquisitions. CoinGecko tracks 120 institutions holding 1,510,408 BTC worth $165 billion, representing 7.19% of Bitcoin’s total supply. This unprecedented corporate hoarding of digital assets has created a new class of publicly traded vehicles that function more as leveraged crypto bets than traditional operating companies.

The Anatomy of a Modern Speculative Mania

In 2025, these entities have raised over $15 billion in capital, surpassing traditional venture funding in the crypto space. Strategy (formerly MicroStrategy) alone holds 580,250 Bitcoins worth over $64 billion, transforming from a software company into what critics describe as a leveraged Bitcoin fund trading on public markets.

The mechanics of these treasury plays amplify systemic risks. DATs raise billions via public markets to hoard crypto, trading at net asset value (NAV) premiums during bull markets and adding leverage for gains – but downturns flip these to discounts, risking forced sales that could crash prices. The growth model critically depends on persistent equity premiums to NAV, driven by the assumption of perpetually rising cryptocurrency prices.

Structural Vulnerabilities and Leverage Risks

The parallels to 1920s investment trusts are particularly concerning. Galaxy Digital warns that the Bitcoin treasury play presents “an interesting parallel with the rush into investment trusts of the 1920s, a reflexive loop and mass speculative pathology”, noting that during that era, new trusts launched at a rate of one per day before the eventual collapse.

DATCOs typically emerge through innovative financing structures, including reverse mergers into NASDAQ-listed shells, allowing private entities to go public quickly without traditional IPO scrutiny. Galaxy reports that ten or so firms a week are now crowding into this trade, creating dangerous correlations both among treasury companies and with underlying crypto markets.

The Ethereum treasury sector exemplifies the concentration risks. Just 11 companies actively acquiring Ethereum collectively hold 3,436,285 ETH worth $15.23 billion. Ethereum faces particular vulnerability with 3.4% of its supply held by DATs acquired largely since March 2025, driving a 95% price surge from $2,170 to $4,240. In a severe unwind, analysts project ETH could plummet to $2,500-$3,500 or lower.

The Unwind Scenario

An unwind in the DATCO trade could exert significant downward pressure on digital asset prices, as outflows driven by redemptions would reverse the “persistent bid” that treasury inflows have created. Several firms’ stocks are already flirting with discounts to NAV, prompting some companies to begin buying back stock using digital asset reserves or operational cash.

The concentration of holdings creates cascade risks. Crypto treasury companies must balance risk, debt and liquidity to survive market cycles, with prudent management determining which firms endure and which face forced sell-offs. Companies should invest in supply-capped cryptocurrencies or blue-chip digital assets rather than altcoins that can lose up to 90% of their value between cycles.

Conclusion: History’s Rhyme in Digital Markets

The crypto treasury phenomenon represents more than a speculative excess – it embodies the market’s perpetual vulnerability to narrative-driven manias. While institutional investment has been touted as proof that crypto has matured into a global asset class, the leverage, concentration, and reflexive dynamics suggest otherwise.

DATs have accelerated crypto’s mainstream adoption while carrying the seeds of their own undoing, risking amplified volatility and systemic shocks. Many crypto treasury companies are expected to fail or offload holdings during the next downturn, though some will survive by adopting disciplined strategies. Companies with operating businesses generating revenue stand better positioned than pure treasury plays functioning as publicly traded acquisition vehicles reliant on funding.

For investors, the lesson is clear: when capital allocation becomes detached from fundamental value creation, when leverage compounds upon leverage, and when yesterday’s innovation becomes today’s speculation vehicle, the outcome rarely differs from historical precedent. The crypto treasury boom may yet prove sustainable for select disciplined operators, but for many others, it threatens to become the digital age’s answer to the dotcom bust – a cautionary tale of excess that future investors will study with the same mixture of fascination and disbelief.

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