Digital asset treasury firms are heading into 2026 facing their most serious test yet. After rapid growth during the last crypto cycle, industry executives are warning that many companies built primarily around holding digital assets—especially altcoins—may not survive the next market downturn. As investor scrutiny intensifies and token prices remain volatile, the era of simple accumulation as a business model appears to be coming to an end.

Over the past year, dozens of digital asset treasury (DAT) firms launched with the goal of giving public market investors exposure to cryptocurrencies. While the strategy initially attracted attention during bullish conditions, declining asset prices and tighter capital markets have exposed structural weaknesses across the sector.

Mounting Pressure on Crypto Treasury Companies

Altan Tutar, co-founder and CEO of MoreMarkets, believes the outlook for many digital asset treasury firms is increasingly bleak. He argues that the market has become overcrowded, with several firms struggling to justify their valuations relative to the assets they hold.

According to Tutar, companies focused primarily on altcoins are likely to face the greatest risk. Maintaining market capitalization above net asset value becomes difficult when token prices fall and liquidity dries up. Even firms holding major assets such as Ethereum, Solana, or XRP are not immune, he cautions, unless they offer more than passive exposure.

In this environment, treasury companies that fail to generate consistent returns or provide tangible value beyond asset accumulation could be forced into selling their holdings simply to cover operating expenses. That outcome not only erodes investor confidence but also accelerates downward pressure during market stress.

Bitcoin Treasuries Are Not Immune

Concerns extend beyond altcoin-focused firms. Ryan Chow, co-founder of Solv Protocol, points to the rapid rise of Bitcoin treasury companies as a potential warning sign. At the start of 2025, roughly 70 companies held Bitcoin on their balance sheets. By midyear, that number had grown to more than 130.

Chow argues that holding Bitcoin alone is not a guaranteed growth strategy. Without yield generation or liquidity planning, treasury firms risk becoming forced sellers during downturns. He notes that the strongest performers are those treating crypto reserves as part of a broader financial strategy—using on-chain tools to generate income, access liquidity, or manage risk during periods of volatility.

By contrast, companies that positioned crypto accumulation primarily as a branding or marketing exercise often struggle once market sentiment shifts. As operating costs rise and funding becomes scarce, these firms may find themselves liquidating assets at unfavorable prices.

ETFs Raise the Bar for Treasury Firms

Adding to the pressure is growing competition from crypto exchange-traded funds. Vincent Chok, CEO of stablecoin issuer First Digital, believes ETFs are reshaping investor expectations. With regulated exposure, improved transparency, and in some cases yield-generating features, ETFs increasingly offer a simpler alternative for investors seeking digital asset exposure.

Chok argues that for digital asset treasury firms to remain relevant, they must evolve toward more traditional financial standards. Strong governance frameworks, transparent reporting, and integration with established financial infrastructure are becoming essential. Treating Bitcoin or other digital assets as just one component of a diversified and professionally managed financial plan will likely determine which firms survive beyond 2026.

A Turning Point for the Digital Asset Treasury Model

The coming year may mark a decisive turning point for the digital asset treasury sector. As the market matures, investors are demanding sustainability, risk management, and real financial performance—not just exposure to volatile assets.

Executives across the industry agree that the next cycle will favor disciplined operators that generate yield, manage liquidity responsibly, and align more closely with traditional finance standards. Firms that fail to adapt may struggle to maintain relevance, while those that do could emerge stronger in a more competitive and institutionalized crypto landscape.

In 2026, survival for digital asset treasury firms will depend less on what they hold—and more on how they manage it.

Bitcoin’s recent price action is revealing a sharp geographic divide in market behavior. While U.S. trading hours have become the primary source of selling pressure, Asian sessions are increasingly absorbing supply, helping stabilize the broader market. At the same time, on-chain data from Glassnode shows capitulation reaching its highest level of the current cycle, underscoring the intensity of the late-year sell-off.

Together, these trends offer a clearer picture of how regional flows and investor psychology are shaping Bitcoin’s short-term trajectory.

Regional Trading Patterns Show Clear Divergence
Data tracking Bitcoin’s cumulative returns by trading session highlights a stark contrast between global markets. From December 18 to December 25, U.S. trading hours steadily pushed cumulative returns into negative territory. The selling was persistent rather than brief, suggesting deliberate exposure reduction instead of short-term profit-taking.

In contrast, Asia-Pacific trading sessions consistently logged positive returns over the same period. Even as volatility increased and prices softened, buyers in Asian markets continued to step in, offsetting much of the selling pressure originating from the U.S. European trading hours remained relatively neutral, hovering close to flat and acting neither as a strong source of demand nor supply.

This session-based breakdown shows that Bitcoin’s recent price stability has depended heavily on Asian demand. Without that regional buying, losses driven by U.S. hours could have resulted in a much deeper drawdown.

Bitcoin Cycle Timing Remains Historically Consistent
Despite the sharp sell-off, broader cycle analysis suggests Bitcoin is still moving in line with historical market patterns. Comparative data tracking price performance from cycle lows across multiple periods—including 2011–2015, 2015–2018, 2018–2022, and the current cycle—shows a familiar progression.

In prior cycles, Bitcoin typically experienced an early expansion phase followed by a cooling period marked by drawdowns, slower momentum, and consolidation. The current price structure closely mirrors those past phases at similar time intervals. While volatility has increased, the timing of the pullback does not appear unusual when viewed through a long-term cycle lens.

This alignment suggests that the recent decline may represent a structural reset rather than a breakdown in the broader market trend. Historically, similar phases have preceded renewed accumulation before the cycle fully matures.

Capitulation Spikes to New High as Selling Accelerates
Glassnode data adds another layer to the picture. A widely followed capitulation metric surged to its highest level on record as Bitcoin prices dropped sharply toward the end of 2025. Capitulation typically reflects forced selling, loss realization, and heightened stress among market participants.

Previous spikes in the same metric appeared during mid-2024 and early 2025, each coinciding with rapid price declines. However, the latest reading stands out as significantly larger, indicating a more intense wave of selling pressure than seen during earlier pullbacks.

This suggests that a meaningful portion of the market may have exited positions under stress, particularly during U.S. trading hours. While painful in the short term, capitulation events have historically marked periods where weaker hands exit and longer-term holders begin to reaccumulate.

What This Means for Bitcoin Going Forward
The combination of regional divergence, historical cycle alignment, and record capitulation paints a complex but informative picture. Bitcoin’s recent weakness is not being driven by a uniform global exit. Instead, selling pressure appears concentrated in specific regions and sessions, while other markets continue to provide meaningful support.

Capitulation, while unsettling, often plays a critical role in resetting market structure. When selling becomes exhausted, volatility tends to decline, creating conditions for stabilization or gradual recovery. The fact that Asian demand has remained resilient during this phase suggests that global interest in Bitcoin has not disappeared—it has simply shifted.

In the near term, volatility is likely to remain elevated as markets digest the recent sell-off. However, from a broader perspective, Bitcoin’s behavior continues to fit within familiar historical patterns rather than signaling an unprecedented breakdown.

As liquidity rotates across regions and capitulation runs its course, the market’s next phase will depend less on panic-driven selling and more on whether sustained demand can re-emerge once pressure subsides.

Ethereum closed 2025 with a major milestone that underscores its continued leadership in the smart contract ecosystem. According to data from Token Terminal, developers deployed 8.7 million smart contracts on Ethereum in Q4 2025, marking the highest quarterly total in the network’s history.

The figure reflects more than just raw activity. It points to sustained confidence in Ethereum as the primary platform for building decentralized applications, even as competition from alternative blockchains intensifies.

Ethereum contract deployments have steadily increased over the past year, but the sharp acceleration in the final quarter signals that developers are not slowing down. Instead, they appear to be doubling down on Ethereum’s infrastructure as the foundation for long-term innovation.

Ethereum’s Developer Ecosystem Shows Structural Strength

The surge in Ethereum smart contract deployments is closely tied to the rapid expansion of its Layer 2 ecosystem. Rollup networks such as Arbitrum, Optimism, and Base have lowered costs and improved scalability while maintaining compatibility with Ethereum’s core architecture. As a result, developers can deploy contracts more frequently without facing the same economic constraints that once limited on-chain experimentation.

This rollup-driven model has effectively extended Ethereum’s reach. While contracts may execute on Layer 2 networks, they still rely on Ethereum for settlement and security. That relationship helps explain why Ethereum contract activity continues to rise even as usage spreads across multiple chains.

At the same time, developer tooling around Ethereum has matured significantly. Improved frameworks, clearer documentation, and broader grant support have reduced friction for teams launching new protocols or testing novel ideas. These improvements make it easier to move from concept to deployment, contributing directly to the record numbers seen in Q4.

DeFi and NFTs Contribute to Renewed On-Chain Activity

Another factor behind the increase in Ethereum contract deployments is a rebound in decentralized finance and NFT-related experimentation. While earlier cycles saw speculative excess, recent activity has leaned more toward infrastructure upgrades, protocol iterations, and utility-focused applications.

DeFi teams continue to refine lending, trading, and liquidity mechanisms, often deploying multiple contracts as part of iterative development. NFT projects, meanwhile, are expanding beyond simple collectibles into areas such as gaming, identity, and digital rights, each requiring more sophisticated smart contract architectures.

Together, these trends create consistent demand for new deployments rather than one-off launches.

Why the 8.7 Million Figure Matters

Reaching 8.7 million Ethereum contract deployments in a single quarter is not just a symbolic achievement. It highlights the depth of developer engagement and suggests Ethereum remains the default environment for building complex on-chain systems.

Unlike short-term metrics tied to price or speculation, developer activity tends to reflect long-term confidence. Builders invest time and resources where they expect ecosystems to remain relevant and secure. The Q4 data indicates that, despite higher competition and ongoing debates around scalability and fees, Ethereum still holds that position.

Looking ahead, Ethereum’s rollup-centric roadmap is likely to push deployment numbers even higher. As more activity shifts to Layer 2 networks, developers can experiment faster while relying on Ethereum as the settlement layer. That dynamic reinforces Ethereum’s role as the backbone of Web3 rather than diminishing it.

For now, the record-setting quarter sends a clear signal: Ethereum’s developer ecosystem remains one of the strongest indicators of its long-term resilience and relevance in the blockchain space.