Crypto treasury inflows hit lowest level since October 2024
In brief
- Digital asset treasury inflows fell to $180 million in May, lowest since October 2024
- Bitcoin treasury firms accounted for 98% of inflows; May down 95% from April
- Investors reassessing passive treasury models amid ETF competition and staking pressure
- Company fundamentals, not ETF competition alone, determine treasury firm valuations
Bitcoin dominance, broader slowdown
Bitcoin treasury companies accounted for nearly all May inflows, with $177 million representing about 98% of the monthly total. Non-Bitcoin assets made only marginal contributions, with smaller inflows from ZCash, Story, and Sui, while Litecoin recorded a $1.89 million outflow.
Even Bitcoin's performance was muted. Bitcoin inflows were down sharply from their $3.8 billion recorded in April, underscoring how steep the decline has been. May inflows were about 93% below the monthly average for January through May, signaling a sustained deterioration in capital formation across the sector.
From passive to active: the structural shift
The slowdown reflects a fundamental reassessment. Investors are reassessing passive crypto treasury models as exchange-traded funds, net asset value compression, and pressure to generate yield weaken the case for companies that simply raise capital and hold tokens.
Galaxy Digital previously argued that the "raise-and-hold" era for DATs is over and that treasury firms may need to put assets to work through staking, validator infrastructure, DeFi strategies, or other active treasury models. On May 26, staking infrastructure provider Everstake argued that Ether treasury companies are already under pressure to generate revenue from staking and other yield strategies as spot crypto ETFs weaken the appeal of public companies that simply hold ETH.
Staking accounted for an average of 60% of reported revenue among six treasury firms that disclosed staking-related income, showing how critical active yield generation has become.
The ETF effect—and what it misses
Arthur Firstov, chief business officer of Mercuryo, pushes back on a simplistic narrative. Blaming ETFs alone for the repricing of digital asset treasury firms oversimplifies the actual market dynamics. Company-specific factors matter more than headlines suggest.
"ETFs do impose a structural constraint that didn't exist before. They set a permanent ceiling on what premium treasury firms can charge. Every quarter now requires fresh justification for that markup." — Arthur Firstov, chief business officer of Mercuryo
Firstov notes that equity dilution, operating costs, balance sheet losses, and broader risk sentiment weigh heavily on whether treasury firms trade at premiums or discounts. Staking can help. For treasury firms holding Ether and other proof-of-stake assets, staking can improve capital efficiency by creating programmatic cash flow. But it's no silver bullet.
Companies with high operating costs or continuous dilution cannot overcome weak fundamentals with a 3% to 5% staking yield. Structure matters. Fundamentals matter. And May's numbers suggest the market has finally started pricing that in.
Frequently asked questions
Why did crypto treasury inflows drop so sharply in May?
Investors are reassessing passive treasury models that simply hold tokens. Competition from spot crypto ETFs, pressure to generate active yield through staking, and company-specific weaknesses (high operating costs, dilution) have made passive holding less attractive. May's $180 million inflow was 93% below the monthly average for January through May.
Can staking revenue save struggling treasury firms?
Staking helps but isn't a cure-all. It accounted for 60% of reported revenue among six treasury firms that disclosed staking income, and can improve capital efficiency for Ether holdings. However, firms with high operating costs or continuous dilution cannot overcome weak fundamentals with a 3% to 5% staking yield alone.
Are ETFs the only reason treasury firm valuations are falling?
No. While ETFs do set a structural ceiling on premiums treasury firms can charge, Arthur Firstov of Mercuryo argues this oversimplifies the market. Company-specific factors—equity dilution, operating costs, balance sheet losses, and risk sentiment—weigh heavily on whether firms trade at premiums or discounts.
