Retail investors across Wall Street have lost nearly $17 billion trying to get exposure to Bitcoin through crypto treasury firms like Metaplanet and Michael Saylor’s Strategy, according to research released Friday by 10X Research.
The report, titled “After the Magic: How Bitcoin Treasury Firms Must Evolve Beyond NAV Illusions,” said those losses came from inflated share premiums that let these companies sell stock far above the real value of their crypto holdings. When prices fell, small investors were left holding the bag as share values collapsed.
Analysts estimated that while retail investors lost $17 billion, new shareholders overpaid by another $20 billion just to gain Bitcoin exposure. It pointed to Strategy as a prime example. Shares that once traded at three to four times the firm’s actual Bitcoin holdings now sit at only 1.4 times, showing how inflated valuations have been drained out of the system.
Bitcoin premium model breaks down
The business model used by most of these crypto treasury firms was simple but dangerous. They sold shares at massive premiums to their net asset value (NAV), took the difference, and bought more Bitcoin. That loop worked until market conditions reversed.
Metaplanet, for instance, poured $1 billion into Bitcoin, sending its market cap surging to $8 billion. But when the correction hit, it crashed to $3.1 billion, even though it still held around $3.3 billion worth of Bitcoin, as Cryptopolitan reported.
“The compression between market value and share price is now a serious concern,” analysts at 10X Research wrote. They said these firms can’t keep running on “inflated NAVs” and need to act more like arbitrage-driven asset managers.
The report added, “The smarter DAT firms will still be able to generate 15–20% annual returns,” but only if they adapt to the changing market. At the moment, Metaplanet holds more than 30,000 Bitcoin, valued at about $3.4 billion on its website.
Shareholders have already approved a plan to issue preferred shares, hybrid securities that mix debt and equity features, to fund more Bitcoin purchases. In September, the firm raised around $1.4 billion through an international equity sale to keep buying the coin.
Crypto market suffers brutal week
This report came after one of the worst weeks for the crypto market in history. Data from CoinGecko showed that more than $600 billion in total market value evaporated in just seven days.
Tensions between the US and China are rising again, and the effect is spreading across the entire market. Then First Brands Group and Tricolor Holdings went under, setting off alarms about hidden credit risks.
At the same time, banks like Zions Bancorp and Western Alliance are getting slammed with fraud-related write-downs, wiping out over $100 billion in market value in just one day.
Bitcoin, long advertised as “digital gold” and a supposed safe-haven asset, plunged 4% on Friday to $103,550, its lowest level since June. Ether, the second-largest token, slipped below $3,700, losing about 25% from its August peak.
Meanwhile, old-school havens like gold and silver are still making new highs, leaving Bitcoin trailing behind. The token dropped 6.3% in the week ending October 12, its largest decline since March, and hasn’t bounced back. The drop hit nearly every cryptocurrency, showing how deep the current downturn runs.
The Binance-linked token BNB also crashed as much as 11% on Friday before cutting some of its losses. Analysts said the world’s biggest crypto exchange, Binance, was partly responsible for the chaos after users were hit with technical glitches and price mismatches, which led to record liquidations on October 10 and 11. The exchange has since promised around $600 million in compensation for affected customers and businesses.
On Friday, investors pulled out $593 million from US-listed Bitcoin and Ether ETFs. Derivatives traders aren’t sitting still either. The put-to-call ratio for Bitcoin on Deribit spiked to 1.33 in the past 24 hours. That ratio means more traders are stacking up put options, which act as protection in case prices crash further.
