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It's been a big year for companies announcing pivots to bitcoin, and according to analysts at 10X Research, the trend hasn't been a boon for investors. In just the last few months, everything from a vape company, to a European soccer investment firm, to an energy solutions provider all announced that they would start amassing crypto, resulting in massive spikes in their share price. This strategy provided a seemingly straightforward way for struggling companies to rise above the penny stock line, buoyed by the rising crypto market. Following the example set by Strategy founder Michael Saylor, who went all-in on bitcoin in 2020, hundreds of firms have converted their businesses to bitcoin holding companies this year. But a new report says their time in the sun may be ending, and retail investors have paid a hefty price for rushing into the bitcoin treasury frenzy as many stocks have come tumbling back down to earth. "For retail investors, however, the picture is stark," analysts at 10X Research said a note at the end of last week. "They've effectively lost around $17 billion, as new shareholders overpaid for Bitcoin exposure by an estimated $20 billion." The trend that allowed the stocks to thrive has reversed. Buoyed by endless bullishness for bitcoin, Strategy and other companies were able to sell shares at a hefty premium relative to the value of their underlying crypto holdings. "They conjured billions in paper wealth by issuing shares far above their real Bitcoin value—until the illusion vanished," the report's authors said. "Now, those once-celebrated NAV premiums have collapsed, leaving investors holding the empty cup while executives walked away with the gold." Related stories Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know They added that "the era of financial magic is over; from here on, success will depend on trading discipline, market timing, and genuine alpha generation." That isn't to say that 10X's analysts believe all DAT stocks are doomed. They added that they believe some companies in the space can succeed but only if they pivot to an operational model rooted in actual strategy, rather than simply increasing exposure to a volatile asset. But the report went on to say that companies pursuing digital asset treasury plays should not rely on retail investors to fuel another rally. "With NAVs now having fully round-tripped, retail investors have lost billions—and many likely lack the conviction to keep adding to their positions."
