Companies that pivoted to crypto-buying strategy have slowed purchases. Many have seen shares drop.

The hot crypto-treasury summer is over.

More than 200 companies went all-in on stockpiling digital currencies this year. Many investors are already cooling to the idea.

Corporate purchases of bitcoin have fallen steadily in recent months, and in September dropped to their lowest pace since April. A quarter of the public companies that adopted a bitcoin treasury strategy are now trading below the total value of their digital-token holdings, according to K33 Research.

Some stocks have tumbled by more than 50% since going public with their plans, while others have drawn scrutiny from regulators. By contrast, the Russell 2000 index of small-cap stocks surged 12% during the third quarter.

The corporate practice of adding bitcoin and other cryptocurrencies as a "treasury" asset exploded into a fast-moving trend after President Trump publicly signaled his support for the digital-asset industry. Within months, scores of companies had unveiled plans to leave behind their focus on industries ranging from biotechnology to farming equipment for bitcoin and other cryptocurrencies.

Bankers and market analysts blame the slowdown on the glut of stock the crypto treasury companies issued in private sales to investors. These offerings seemed to many as a quick and efficient way to finance their purchases of bitcoin and other digital assets. As it turns out, too many of them adopted the same strategy, at the same time.

"The market is not going to be able to absorb an unlimited number of these," said Jerry Serowik, head of Cohen & Co. capital markets. "I expect the new launches to slow, and then you will see the capital markets focus on those that are already public and helping them raise incremental capital to grow the pie."

Illustration of Donald Trump holding a Bitcoin on a screen at a cryptocurrency exchange office, with people walking by.

Even Strategy, the former software company that pioneered the pivot to bitcoin buying, has struggled with the oversupply. Shares of Strategy, formerly known as MicroStrategy, fell 20% during the third quarter. The stock now trades at 1.5 times the value of its bitcoin holdings, down from a peak of more than 3 times.

Strategy copycats haven't fared better either. And when a crypto treasury company's shares begin to trade below the value of their token holdings, it can hinder their ability to issue new stock needed to raise funds to buy more crypto. Companies bought 37,881 bitcoin in September, the slowest pace since April and down from 49,303 in August and 103,250 in July, according to bitcointreasuries.net.

One potential solution to the surplus of crypto treasury companies emerged last week, when Strive struck a deal to buy Semler Scientific, a former medical-equipment company that joined the bitcoin-treasury craze in May 2024. Strive, an asset manager co-founded by onetime presidential candidate Vivek Ramaswamy, trades at a premium to its bitcoin holdings. Semler doesn't. Combined, though, they will own more than 10,900 bitcoin. Investors have been more willing to pay a premium for shares in larger crypto companies.

"If you look at who trades at the strongest multiples, it is typically the ones with the largest piles of bitcoin with the right management teams," said Serowik. "The M&A market is going to be another avenue for some of these companies to acquire more bitcoin."

A flurry of other deals between well-capitalized companies and smaller, struggling players could help squeeze out the excess shares from the market, bankers say.

That is, unless digital currency prices tank. A sharp drop in bitcoin and other tokens could force companies to sell their holdings to cover their operating costs, in turn exacerbating the selloff.

Bitcoin has risen 6% over the quarter, while ether -- the native token issued on the Ethereum blockchain -- surged 68%.

Deals are still happening outside of bitcoin, with companies emerging to hoard tokens such as ether, solana and AVAX. These tokens can be "staked" or locked up for a specified amount of time t o earn a return, offering crypto treasury shareholders a dividend-like payout.

Still, the proliferation of crypto treasury companies that accumulate everything from bitcoin to joke token dogecoin in such a short period has caused industry players to question the sustainability of the strategy over the long term.

Gracy Chen, chief executive of crypto exchange Bitget, said she has turned down bankers and venture-capital firms hoping to launch a crypto treasury company that buys Bitget's native token.

"I personally don't think it is sustainable," said Chen. "There are too many companies doing treasury deals, and not everyone is going to be successful."