• Crypto-hoarding treasury companies (DATs) like Strategy (MSTR) and Smarter Web Company report billions in unrealized losses as Bitcoin falls below $70,000, with shares trading at steep discounts.
  • Recent sales by firms such as Ethzilla and FG Nexus (FGNX) signal growing selling risk, potentially pushing Bitcoin toward $50K-$55K and sparking broader market contagion.
  • Analysts warn of a "Hotel California trade" scenario, where DATs struggle to exit positions without crashing prices, amid Fed policy uncertainty and ETF outflows.

Bitcoin's slump to under $70,000 in early February 2026 has intensified the squeeze on crypto-hoarding treasury companies, with unrealized losses mounting and stock prices tumbling. According to people familiar with the matter, firms like Strategy—formerly MicroStrategy—and Smarter Web Company are facing pressure as their massive Bitcoin holdings lose value, raising fears of forced sales that could ripple through broader markets.

Strategy, a publicly traded business intelligence software firm, reported a $6.3 billion unrealized loss as of February 5, 2026, with its shares down more than 70% since July 2025 and trading below net asset value. The company holds 713,502 Bitcoin, a strategy that fueled last year's rally but now risks backfiring. Similarly, UK-based Smarter Web Company has seen a $100 million unrealized loss in just three months on its $300 million Bitcoin investment, though it remains better capitalized than peers by avoiding risky debt structures.

Recent sales by DATs like Ethzilla and FG Nexus show the threat is real, with falling stock prices and ETF outflows potentially driving Bitcoin toward $50,000 to $55,000. Vulnerable firms include Enlivex, Twenty One Capital, and Evernorth, which lack revenue streams and may be forced to sell crypto to fund operations. One analyst described it as a "Hotel California trade," where it's easy to check in with crypto holdings but hard to exit without crashing the market.

Efforts to manage these risks have hit a snag amid broader economic uncertainty. The U.S. Federal Reserve paused rate cuts in January 2026 and nominated hawkish Kevin Warsh as chair, boosting pressure on risk assets. Market participants are also watching for potential influence from President Trump via Treasury Secretary Scott Bessent, adding to the volatility. Without a deal or capital infusion, some DATs could face elimination, per a shift toward "capital operators" emphasizing risk management over hoarding.

In a brief statement, a spokesperson for Strategy declined to comment on specific selling plans, but noted the firm is monitoring market conditions closely. Attempts to reach Smarter Web Company for comment were unsuccessful. Meanwhile, firms like BitMine have seen shares fall 30% on ether holdings, and Chinese company Jiuzi Holdings announced a $40 million crypto investment despite the downturn, highlighting divergent strategies.

Short-term, all eyes are on Q4 earnings reports, such as Strategy's on February 5, which may reveal hold-or-sell strategies. Long-term, the episode tests the resilience of the buy-and-hold model, with analysts predicting firms may adopt more flexible capital structures or face further stock declines. Tom Lee of BitMine views the losses as normal for long-term ownership, but others warn of dilutive raises or liquidations if the Fed's path remains uncertain.

Correction: An earlier version of this article misstated the timing of Bitcoin's slump; it occurred in early February 2026, not late January.