Written by: David, Deep Tide TechFlow
On the afternoon of the 10th, President Trump announced on Truth Social that a 100% tariff would be imposed on Chinese goods. This news instantly ignited panic in the global financial markets.
In the following 24 hours, the cryptocurrency market experienced the largest liquidation event in history, with over $19 billion in leveraged positions being forcibly closed. Bitcoin plummeted from $117,000, briefly falling below $102,000, with a daily decline of over 12%.
The U.S. stock market also could not escape the doom. By the close on October 10, the S&P 500 index fell by 2.71%, the Dow Jones Industrial Average dropped by 878 points, and the Nasdaq Composite Index decreased by 3.58%, all marking the largest single-day declines since April.
However, the real disaster zone was those DAT (Digital Asset Treasury) companies that had cryptocurrency assets as treasury reserves.
MicroStrategy, as the largest corporate holder of Bitcoin, saw its stock price suffer as well; other companies with cryptocurrency reserves experienced even more pronounced declines. According to after-hours trading data, investors continued to sell off.
For these companies exposed to dual risks in both the cryptocurrency and stock markets, has the worst moment passed?
Why did DAT companies fall harder?
DAT companies first faced the direct impact on their balance sheets. Taking MicroStrategy as an example, the company holds approximately 639,835 Bitcoins. When the price of Bitcoin drops by 12%, it means that its asset value evaporates by nearly $10 billion in an instant.
Such losses must be accounted for as "unrealized losses" under accounting standards. Although it is not a real loss as long as they do not sell, the numbers on the financial statements are very real.
As an investor, you see a company's core assets rapidly depreciating. There is also a multiplier effect regarding market confidence.
At the beginning of 2025, MicroStrategy's net asset value (NAV) premium was as high as 2 times, but by the end of September, it had compressed to 1.44 times; currently, it is around 1.2.
Other companies have seen their mNAV almost return to 1, with some even dropping below 1. These changes in numbers reflect a harsh reality: market confidence in the DAT model is wavering in extreme conditions.
In a bull market, investors are willing to give these companies a premium, with the narrative being that they are pioneers of cryptocurrency innovation. But when the market turns, the same story becomes an unnecessary risk exposure.
Non-Bitcoin cryptocurrencies suffered significant technical damage in this round of leveraged sell-offs, with some even crashing to zero; even large-cap altcoins experienced halving or even greater declines due to insufficient liquidity.
The stocks of companies holding these assets became the preferred targets for short selling as market sentiment worsened.
When market panic strikes, investors need to quickly reduce their positions. Although the Bitcoin market trades 24/7, large sell-offs can severely impact prices. In contrast, selling stocks like MSTR on Nasdaq is much easier.
Selling hundreds of billions of dollars worth of gold won't disrupt the market, but selling $70 billion worth of Bitcoin could lead to a price collapse and trigger massive liquidations; this liquidity difference makes DAT company stocks a channel for rapid capital withdrawal.
Worse still, many institutional investors have strict risk control thresholds. When volatility exceeds a certain threshold, they must reduce their positions, whether they want to or not. And DAT companies happen to be among the most volatile targets.
To put it in an inappropriate metaphor, if ordinary tech companies are sitting in a boat, then DAT companies are like tying two boats together, one sailing in the stock market and the other struggling in the cryptocurrency market.
When both sides encounter severe weather simultaneously, the impact they endure is not additive but multiplicative.
Who is suffering the most, and who is more resilient?
Looking at the list of DAT companies with the largest declines from the previous trading day, a clear pattern emerges: the smaller the company, the harder it falls.
Forward Industries dropped by 15.32%, with an mNAV of only 0.053. BTCS Inc. fell by 12.70%, and Helius Medical Tech dropped by 12.91%.
These small companies, with market capitalizations of less than $100 million, found almost no buyers in the panic. In contrast, MicroStrategy, despite being the largest Bitcoin holder, only saw a decline of 4.84%.
The logic behind this is simple: liquidity.
When panic strikes, the bid-ask spread for small-cap stocks widens dramatically, and a slightly larger sell order can crash the stock price.
For relatively larger DAT companies, MicroStrategy's mNAV is only 1.28 times, trading almost at its holding value. The market values these companies primarily based on their cryptocurrency asset value plus a small premium. When the cryptocurrency market crashes, they have no other business to buffer against the losses.
When a company's market capitalization is nearly equal to the value of its held cryptocurrency assets (mNAV close to 1), it means the market believes this company has no additional value beyond holding coins.
Bitmine's mNAV is 0.98, and other companies without precise mNAV data are likely to be very low as well. These companies have effectively become cryptocurrency ETFs disguised as public companies.
The question is, since there are now real Bitcoin ETFs available for purchase, why would investors still want to hold indirectly through these companies?
This may explain why, in times of panic, these low mNAV companies experienced even larger declines. They bear the risks of cryptocurrency assets and the stock market without providing any additional value.
In just a few hours, the U.S. stock market will open. After a weekend of cooling off, will market sentiment improve? Will those small DAT companies that fell more than 10% continue to be sold off, or will there be bottom-fishing capital entering the market?
From the data, companies with mNAV below 1 may present opportunities for overselling, but they could also be value traps. After all, when a business model itself is under scrutiny, being cheap is not necessarily a reason to buy.
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