How Digital Asset Treasury Companies Can Survive Bear Markets: The Case of the Strategy and Bitcoin

Abstract

Digital Asset Treasury (DAT) companies, public firms that hold large crypto reserves as a core strategy, deliver levered exposure to digital assets but face acute downside risk when equity premia over net asset value multiples (mNAV) compress in bear markets. This paper develops a survival framework that couples conservative treasury policy with an operating line that monetizes holdings independent of mark-to-market gains. Using Strategy (formerly MicroStrategy) as a case, we propose a "BTC-to-sats" payments rail that allocates a small, risk-capped liquidity sleeve of the treasury to Lightning Network channels, generating price-agnostic fee revenue (acquiring bps, routing, hedge/FX spread) while keeping settlement exposure near zero beta to BTC. We formalize a no-forced-sale condition and show how disclosed KPIs allow investors to test whether operating cash flows can bridge an 18 to 24-month bear without liquidations. The feasibility of the rail is supported by Strategy's Lightning initiative and empirical Lightning performance. Our model generalizes across DAT types and provides implementable disclosures that can sustain an mNAV premium through cycles.