The Crypto Treasury Craze Meets Reality

The news from the cryptocurrency world shows how hype turns into trouble when the foundation is weak.

Companies that built their future on holding tokens instead of running strong operations are now feeling the pressure of a $1 trillion slide in crypto markets. 

The drop did not only hit the tokens. It sent real pain through the stocks tied to this idea.

The fall has been steep. 

Shares in companies that raised debt and equity to invest in bitcoin and ether have lost approximately $77 billion of market value since July. 

The Block reports that this group once had a combined value of $176 billion. Today, the value is closer to $99 billion.

When a business model depends on rising asset prices instead of rising cash flow, a storm exposes the weakness every time. 

I stressed this earlier this year when I shared why the return of crypto fever did not fix any of the problems that brought the last downturn.

One company — Strategy, Inc. — became the face of this idea. 

It is led by Michael Saylor, and it has bought more bitcoin than any other public business in the world. That move inspired a long line of copycats. 

The idea spread into film companies, vaping companies, and electric vehicle companies. They all chased the same story. Buy crypto. Watch it rise. Issue more shares. Then buy more crypto. 

The cycle worked as long as bitcoin kept moving higher. When bitcoin fell from about $115,000 to about $80,000 in a short period, the weakness spread through the group.

The crypto treasury model needed confidence above all. As long as investors believed the tokens would rise, companies could keep raising new money. Once the tide turned, trust faded. 

Today, several companies trade below the value of the bitcoin or ether they hold. That creates a downward pull. 

Investors grow uneasy when a company is worth less than its own holdings. 

To calm the market, some businesses have sold tokens to fund stock buybacks. That adds more selling pressure to crypto markets. The model begins to move backward.

That is exactly what has played out (figures according to the Financial Times): 

The chief executive of Sequans said it was a tactical step to protect shareholder value. 

The companies with stronger balance sheets are feeling the strain as well. Metaplanet in Japan has fallen about 80% from its June high. 

The Smarter Web Company in the United Kingdom has dropped about 44% this year. 

Many of these businesses wanted to repeat the success of the original crypto treasury strategy, yet very few had the scale or balance sheet strength to support it. 

Analysts now estimate that about 95% of these digital asset treasury companies may not survive. Once again, the numbers come from researchers who track the sector daily.

All of this stands in sharp contrast to the American Prosperity approach. We do not buy stocks because they hold a hot asset. We buy them because they run real businesses with real products and real cash flow. 

Our work begins with the basics. We look for rising tailwinds in the real economy. We look for leaders who know how to build value year after year. We look for strong finances. We look for companies that treat shareholders like partners. 

A great business can weather storms because it produces goods and services that solve problems in the real world.

The crypto treasury companies did not build durable businesses. They built trading strategies inside corporate shells. 

I covered this pattern in another recent article that showed how Wall Street keeps creating products that trade like casino bets instead of investments. The theme is the same every time. Shortcuts promise fast riches. Reality exposes the weakness.

The American Prosperity approach is different. 

We search for companies that improve daily life for their customers. We follow firms that invest in research, build new tools, and support growing markets. We do not chase excitement. We follow the facts.

This is why our readers stay steady through moments that shake others. When the market pulls back due to fear, the American Prosperity portfolio holds companies with rising demand. 

These businesses stand on strong foundations. They serve industries that will support America’s long-run growth. They operate in data centers, infrastructure, manufacturing, energy, and software. They form the backbone of the modern economy. Their value comes from cash flow, not from the movement of tokens.

A sell-off in crypto has no impact on America’s long-term strength. Our economy remains the most innovative engine on the planet. Our companies continue to invest in artificial intelligence and advanced technology. 

Capital spending remains strong. New factories are rising across the country. Data center investment keeps expanding. Real businesses are growing through real production and real service, not through hopes pinned on volatile tokens.

The lesson from this period is simple. When you build a strategy on excitement, every swing becomes painful. When you build it on fundamentals, you stay steady. 

The American Prosperity approach stands on fundamentals..

America continues to produce companies that build wealth for patient shareholders. That fact holds firm no matter what happens in crypto markets.

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Regards,

Charles Mizrahi
Prosperity Insider