The Year’s Hottest Crypto Trade Is Crumbling

The hottest crypto trade has turned cold. Some investors are saying “told you so,” while others are doubling down.

It was the move to make for much of the year: Sell shares or borrow money, then plough the cash into bitcoin, ether and other cryptocurrencies. Investors bid up shares of these “crypto-treasury” companies, seeing them as a way to turbocharge wagers on the volatile crypto market.

Michael Saylor pioneered the move in 2020 when he transformed a tiny software company, then called MicroStrategy , into a bitcoin whale now known as Strategy. But with bitcoin and ether prices now tumbling, so are shares in Strategy and its copycats. Strategy was worth around $128 billion at its peak in July; it is now worth about $70 billion.

The selloff is hitting big-name investors, including Peter Thiel, the famed venture capitalist who has backed multiple crypto-treasury companies, as well as individuals who followed evangelists into these stocks.

Saylor, for his part, has remained characteristically bullish, taking to social media to declare that bitcoin is on sale. Sceptics have been anticipating the pullback, given that crypto treasuries often trade at a premium to the underlying value of the tokens they hold.

“The whole concept makes no sense to me. You are just paying $2 for a one-dollar bill,” said Brent Donnelly, president of Spectra Markets. “Eventually those premiums will compress.”

When they first appeared, crypto-treasury companies also gave institutional investors who previously couldn’t easily access crypto a way to invest. Crypto exchange-traded funds that became available over the past two years now offer the same solution.

BitMine Immersion Technologies , a big ether-treasury company backed by Thiel and run by veteran Wall Street strategist Tom Lee , is down more than 30% over the past month.

ETHZilla , which transformed itself from a biotech company to an ether treasury and counts Thiel as an investor, is down 23% in a month.

Crypto prices rallied for much of the year, driven by the crypto-friendly Trump administration. The frenzy around crypto treasuries further boosted token prices. But the bullish run abruptly ended on Oct. 10, when President Trump’s surprise tariff announcement against China triggered a selloff.

A record-long government shutdown and uncertainty surrounding Federal Reserve monetary policy also have weighed on prices.

Bitcoin prices have fallen 15% in the past month. Strategy is off 26% over that same period, while Matthew Tuttle’s related ETF—MSTU—which aims for a return that is twice that of Strategy, has fallen 50%.

“Digital asset treasury companies are basically leveraged crypto assets, so when crypto falls, they will fall more,” Tuttle said. “Bitcoin has shown that it’s not going anywhere and that you get rewarded for buying the dips.”

At least one big-name investor is adjusting his portfolio after the tumble of these shares. Jim Chanos , who closed his hedge funds in 2023 but still trades his own money and advises clients, had been shorting Strategy and buying bitcoin, arguing that it made little sense for investors to pay up for Saylor’s company when they can buy bitcoin on their own. On Friday, he told clients it was time to unwind that trade.

Crypto-treasury stocks remain overpriced, he said in an interview on Sunday, partly because their shares retain a higher value than the crypto these companies hold, but the levels are no longer exorbitant. “The thesis has largely played out,” he wrote to clients.

Many of the companies that raised cash to buy cryptocurrencies are unlikely to face short-term crises as long as their crypto holdings retain value. Some have raised so much money that they are still sitting on a lot of cash they can use to buy crypto at lower prices or even acquire rivals.

But companies facing losses will find it challenging to sell new shares to buy more cryptocurrencies, analysts say, potentially putting pressure on crypto prices while raising questions about the business models of these companies.

“A lot of them are stuck,” said Matt Cole, the chief executive officer of Strive, a bitcoin-treasury company. Strive raised money earlier this year to buy bitcoin at an average price more than 10% above its current level.

Strive’s shares have tumbled 28% in the past month. He said Strive is well-positioned to “ride out the volatility” because it recently raised money with preferred shares instead of debt.

Cole Grinde, a 29-year-old investor in Seattle, purchased about $100,000 worth of BitMine at about $45 a share when it started stockpiling ether earlier this year. He has lost about $10,000 on the investment so far.

Nonetheless, Grinde, a beverage-industry salesman, says he’s increasing his stake. He sells BitMine options to help offset losses. He attributes his conviction in the company to the growing popularity of the Ethereum blockchain—the network that issues the ether token—and Lee’s influence.

“I think his network and his pizzazz have helped the stock skyrocket since he took over,” he said of Lee, who spent 15 years at JPMorgan Chase, is a managing partner at Fundstrat Global Advisors and a frequent business-television commentator.

Every year, thousands of Australians make the decision to pack up life overseas and come home.

After years, sometimes decades, building careers, accumulating assets, and growing families in places like Dubai, London, Singapore, or Hong Kong, the pull back is understandable.

What most don’t appreciate until it’s too late is that the return journey is often far more financially complex than the departure.

Leaving Australia is, financially speaking, a relatively clean event.

You depart, you potentially become a non-resident for tax purposes, and a new set of rules applies.

Coming back, however, means reconciling everything you’ve accumulated offshore with an Australian tax system that hasn’t been standing still waiting for you.

The Tax Residency Trap

The first and most costly mistake is misunderstanding when Australian tax residency resumes.

Many returning expats assume residency only kicks in once they’ve formally re-established themselves, signed a lease, updated their address, started a job. The ATO doesn’t see it that way.

Under Australian tax law, residency can recommence the moment you land with the intention of remaining. That means any taxable events, investment income, asset disposals, foreign account distributions that occur after that point are potentially assessable in Australia, even if they’re sitting in offshore accounts you haven’t touched.

Superannuation: The Clock Doesn’t Stop

One of the most underappreciated issues for returning expats is what’s been happening inside their superannuation fund while they’ve been away.

Contributions may have paused, but fees, insurance premiums, and investment volatility haven’t. Some returning clients are genuinely shocked by how much ground their super has lost to fees during periods of lower balances or inappropriate investment settings.

The more strategic issue is what to do on the way back. If you hold foreign pension arrangements, a UK SIPP or QROPS, a 401(k), and international savings schemes, the question of whether and how to repatriate those funds requires careful planning before you return.

Once you’re a tax resident again, distributions from certain foreign structures can be assessable as ordinary income, and the window to manage that exposure closes.

Offshore Investments Don’t Disappear

Returning to Australia doesn’t sever your obligations in the countries where you’ve been living.

Foreign-held shares, managed funds, or investment accounts will be picked up by Australian tax reporting requirements from the moment residency resumes.

The Foreign Investment Fund rules, transferor trust provisions, and the reporting obligations under Australia’s tax information exchange agreements mean these holdings need to be declared and, in some cases, restructured.

Leaving investments sitting offshore in structures that made sense as a non-resident but create compliance headaches as a resident is one of the most common and expensive mistakes we see.

The restructuring cost, if it’s even possible post-return, typically dwarfs what it would have cost to plan properly in advance.

Property: Both Sides of the Balance Sheet

There are two distinct property problems for returning expats.

The first is what they’ve held while away, an Australian property rented out during the absence.

Depending on how long the property was the main residence and how it was treated during the rental period, the CGT calculation on eventual sale can be complex.

The six-year absence rule provides some relief, but it’s not automatic and has conditions that are frequently misunderstood.

The second is re-entry into the Australian property market.

After years of asset accumulation offshore, many returnees assume they’re well-positioned to buy.

The challenge is that their financial picture, including foreign income history, offshore assets and currency, doesn’t translate neatly into Australian mortgage serviceability.

Lenders read foreign income conservatively, and what looks like a strong balance sheet can create unexpected borrowing capacity issues.

The Fix: Plan Before You Land

The single most effective thing an expat can do is start planning the return 12 to 18 months before departure.

That timeline allows for managed asset disposals under non-resident rules where advantageous, superannuation catch-up strategies, foreign structure rationalisation, and property decisions that aren’t being made under time pressure.

The irony is that most Australians sought financial advice before they left on how to exit cleanly.

Far fewer seek the same rigour on the way back in. Given the complexity involved, that’s an expensive oversight.

Coming home should be a financial clean slate. With the right planning, it can be. Without it, you’ll spend the first few years back unwinding decisions that didn’t have to be problems at all.

Brett Evans is the founder of Atlas Wealth and the author of The Expat’s Handbook.