TLDR

• Avalanche Treasury Corp told regulators it may not survive the year due to financial strain.
• The company cited “substantial doubt” about its ability to continue as a going concern.
• AVAX price declines led to major writedowns and over $26 million in quarterly losses.
• The firm’s AVAX holdings dropped to nearly half of their original purchase value.
• Shares collapsed over 90% within a month and now trade below $0.73.

Avalanche Treasury Corp told regulators it may not survive the year after a steep decline in its finances. The company disclosed material losses and liquidity pressure linked to falling AVAX prices. It also warned that current conditions raise “substantial doubt” about its ability to continue operations.

AVAX Holdings Decline and Balance Sheet Pressure

The company previously promoted a large AVAX treasury valued near one billion dollars during last year’s expansion phase. However, market conditions changed, and the value of its AVAX holdings dropped sharply over recent months. As a result, its market capitalization fell below thirty million dollars, reflecting severe investor concern.

Its operating unit reported losses exceeding twenty-six million dollars in one quarter due to AVAX writedowns. The firm bought AVAX for about two hundred sixty-five million dollars, yet the holdings fell to nearly one hundred twenty-three million dollars. This gap left the company holding assets worth far less than their original purchase cost.

AVAX prices declined forty-seven percent this year and nearly two-thirds over the past twelve months. Consequently, the treasury strategy weakened as asset values dropped and reduced the firm’s financial flexibility. The company stated that these conditions created ongoing uncertainty regarding its financial stability.

Stock Collapse Follows AVAX Treasury Strategy

Avalanche Treasury Corp completed a merger with a blank check company and entered public markets with high expectations. However, investor sentiment turned negative as disclosures revealed risks tied to its AVAX exposure and financial position. The stock fell from above ten dollars to below two dollars within days of additional filings.

Shares continued to decline and traded below seventy-three cents, entering penny stock territory. In total, the stock lost more than ninety percent of its value within one month. This decline reflected market concern over the sustainability of its AVAX treasury model.

The company also pledged a large portion of its AVAX holdings as collateral for a loan agreement. It committed nearly seven point eight million AVAX tokens from a total of thirteen point eight million holdings. This move increased financial risk as falling prices could pressure collateral requirements.

Other AVAX Treasury Firms Show Similar Declines

Other firms pursuing AVAX treasury strategies reported similar declines in value after initial expansion plans. AgriFORCE Growing Systems rebranded as AVAX One and announced a large capital raise to acquire more AVAX. The company aimed to build a significant AVAX treasury supported by strategic investors and advisors.

Despite those plans, its market value dropped sharply and now stands near forty-three million dollars. The firm’s shares declined sixty-eight percent this year and over ninety percent in the past year. These figures highlight the broader pressure affecting companies holding large AVAX reserves.

Data across the sector shows a consistent downward trend in treasury company valuations linked to AVAX exposure. Companies that accumulated AVAX during earlier market optimism now face reduced asset values and weaker investor confidence. This trend underscores the risks tied to concentrated digital asset treasury strategies.

Strategy, the publicly traded firm behind the Strategy (formerly MicroStrategy) Bitcoin treasury model, has moved to reassure investors after a steep drop in both Bitcoin and its own shares intensified fears about the company’s complex capital structure. With Bitcoin trading below $60,000 and Strategy’s stock down more than 70% from its highs, attention has turned to STRC—Strategy’s preferred-like security—and the possibility that its funding mechanics could amplify downturns.

On Monday, Strategy unveiled a new capital framework designed to address concerns around liquidity, financing reflexivity, and the company’s ability to meet obligations during stress. The plan includes up to $1 billion of buybacks for MSTR, up to $1 billion of buybacks for STRC and related securities, an increase in STRC’s dividend to roughly 12%, and expansion of the company’s cash buffer to $2.55 billion. Strategy also disclosed that it may sell up to $1.25 billion in BTC holdings if needed to satisfy dividend or debt requirements.

Key takeaways

• Strategy’s new framework combines buybacks (MSTR and STRC) with a larger cash reserve, aiming to reduce uncertainty during market stress.
• STRC’s dividend is expected to rise to roughly 12%, supported by expanded cash resources under the plan.
• Strategy added a contingency option: selling up to $1.25 billion in Bitcoin if required for dividend or debt obligations.
• Short-term trading activity improved after the announcement, with STRC and MSTR both rallying more than 12% in after-hours trading, according to Yahoo Finance.
• Debate continues over whether the company’s structure can withstand prolonged tightening in funding markets—even if it is not expected to face near-term insolvency.

What Strategy outlined in its capital framework

Strategy’s announcement centers on a restructuring of how it intends to manage risk across its Bitcoin-linked balance sheet and its layered security offerings. The company says the package includes up to $1 billion in buybacks for MSTR and up to $1 billion in buybacks for STRC and related securities.

In addition to buybacks, Strategy is increasing the STRC dividend rate to roughly 12% and expanding its cash buffer to $2.55 billion. Strategy’s filing—an 8-K submitted June 29—spells out the mechanics and priorities management would follow in its capital allocation framework, including an emergency pathway that allows BTC sales if needed to meet obligations.

Crucially for investors who worry about “reflexive” downside dynamics, Strategy also said it may sell up to $1.25 billion in BTC holdings to meet dividend or debt requirements. That disclosure is notable given Strategy’s long-standing “Bitcoin maximalist” positioning and the recurring argument that selling BTC during stress could worsen market conditions.

Following the release, markets reacted positively. As reported with reference to Yahoo Finance, STRC and MSTR shares rose more than 12% in after-hours trading. The piece notes STRC was trading at $84.86 after the announcement, up from $72.06 on June 26.

Why STRC is a flashpoint for investors

STRC sits in the middle of Strategy’s capital structure—positioned as a perpetual preferred-like instrument linked to the broader Bitcoin treasury strategy. Strategy describes STRC as paying an annual dividend of about 12% on a $100 par value, supported by cash and its Bitcoin-linked capital framework.

This design has drawn skepticism from critics who argue that the instrument’s stability depends less on Strategy’s underlying solvency and more on the health of secondary-market demand and liquidity conditions. In other words, even if STRC is not a classic stablecoin, its market behavior can still be sensitive to tightening access to capital.

Earlier concerns have focused on how Strategy’s treasury approach could interact with market stress. Bitcoin critic Peter Schiff has repeatedly challenged Strategy’s model, warning that Strategy can’t sell Bitcoin without negatively affecting Bitcoin’s price and pointing to potential spillover effects if purchasing activity slows or selling accelerates.

At the same time, some analysts and market participants argue the risk framing is overstated. Taran Dhillon, head of digital assets at Kula, told Cointelegraph that Bitcoin volatility alone is unlikely to break the structure; he suggested the more important test is whether Bitcoin remains under pressure while funding becomes progressively more expensive or difficult.

The bear case: liquidity dependency and potential feedback loops

Much of the controversy around Strategy’s structure relates to how its financing cycle can behave in both directions. The core bear argument is that the same momentum that fuels expansion in calmer conditions can intensify stress when investors pull back, funding costs rise, or liquidity in secondary markets deteriorates.

Cointelegraph reported that Brad Garlinghouse, CEO of Ripple, made a similar point on CNBC, criticizing financial engineering as a driver of long-term value. Kyle Rodda, senior analyst at Capital.com, characterized Strategy as a momentum-driven accumulation vehicle: capital raises funds for Bitcoin purchases, and those purchases support the company’s valuation. But he warned the dynamic can reverse when market conditions weaken, funding costs rise, and investor appetite declines.

Rodda also emphasized that secondary market liquidity is a structural dependency. If refinancing pressures or forced selling forces larger adjustments elsewhere, the spillover effects could extend beyond Strategy itself.

Some prominent Bitcoin commentators have compared the scenario to prior stress-tested leveraged structures in crypto. Charles Edwards, founder of Capriole Investments, has been among the critics drawing parallels to Terra/LUNA-era dynamics during drawdowns, framing the situation as potential “feedback loop” risk rather than a purely price-driven story.

The neutral and bull positions: stress may target funding markets first

Not all observers agree that the primary threat is Bitcoin price movement. Dhillon suggested that any early instability would likely show up first in funding conditions—such as widening discounts, higher yields, and reduced issuance capacity—rather than immediate solvency failure tied directly to Bitcoin valuation.

He also highlighted a key distinction: STRC is not a stablecoin pegged mechanically to $100. Instead, its yield profile is designed to adjust with market pricing. The logic, in theory, is that when STRC trades below par value, the effective yield becomes more attractive to buyers, eventually pulling pricing back toward $100.

Cointelegraph also referenced a Bitfire Research report shared with the outlet, which argued that recent STRC price dislocations should not automatically be treated as structural failure. The report stated that Strategy faces no near-term insolvency risk, attributing de-pegging events largely to sentiment and liquidity conditions rather than a sudden change in fundamentals or solvency profile.

On the bull side, the article describes a “three-year MSTR stress test” conducted by Bitcoin supporter Adam Livingston. His model assumes extreme conditions—including a 55% Bitcoin drawdown, closed capital markets, and continued cash burn requiring large Bitcoin sales. The simulation also tracks a dramatic compression in “common equity Bitcoin exposure” (CEBE) and estimates that Strategy would sell approximately 115,727 BTC over three years to meet obligations before stabilization returns.

In Livingston’s scenario, the company survives the cycle and ends with over 700,000 BTC on its balance sheet, with a recovering net asset structure once conditions normalize. The takeaway from this model, regardless of how an investor views its assumptions, is that proponents believe the balance-sheet framework could be robust enough to survive even severe drawdowns—particularly if contingency mechanisms are executed as planned.

What changed—and what remains uncertain

Strategy’s new framework can be viewed as an attempt to make its stress-response playbook more concrete. According to the article’s references to Strategy’s June 29 8-K filing, management is focusing on transparency around how it would act during liquidity or capital-market disruptions—especially through cash buffer expansion, buybacks for both MSTR and STRC, and the ability to monetize Bitcoin up to $1.25 billion if required.

Dhillon described the changes as a meaningful improvement to transparency and confidence, pointing to the enlarged $2.55 billion reserve and a clearer plan for how Bitcoin monetization would work under pressure.

However, critics argue the fundamental dependency remains. Schiff, as cited in the piece, pointed to market-cap vs. Bitcoin value asymmetries—arguing that as long as MSTR’s market cap remains below the value of its Bitcoin holdings, newly issued capital could imply a “negative Bitcoin yield.” In other words, for some skeptics, the debate is not whether contingency tools exist, but whether the market structure will persistently price exposure in a way that helps—or harms—long-term holders.

Ultimately, Strategy’s framework strengthens the company’s toolkit for short-term stress, but it does not remove its reliance on access to capital markets over time. The key unresolved question is whether expanded liquidity buffers, buybacks, and contingency BTC sales can stand up to a prolonged period of tightening across both equity and credit-style markets—precisely the environment where feedback-loop concerns tend to matter most.

For investors, the next watch items are straightforward: whether STRC’s pricing relationship to par value stabilizes, how funding conditions evolve if Bitcoin stays under pressure, and whether Strategy’s disclosed order of operations holds up in practice during the next stress test.

A Massachusetts judge has allowed state authorities to expand their lawsuit against prediction markets platform Kalshi, extending the legal fight over whether the company’s sports event contracts should be regulated as online sports wagering.

In a Tuesday filing in Suffolk County Superior Court, associate justice Peter Krupp permitted Massachusetts regulators to submit a 71-page amended complaint, adding new allegations to the state’s initial case that Kalshi violated Massachusetts law by offering sports-related wagering without the required authorization.

Key takeaways

• A Massachusetts judge allowed the state to file a 71-page amended complaint against Kalshi, keeping the case active.
• The expanded allegations claim Kalshi’s product effectively functions as sports wagering and that its marketing may reach people under 21.
• Massachusetts’ argument hinges on whether Kalshi must be licensed through the Massachusetts Gaming Commission to comply with state rules.
• The dispute also sits within a wider US battle over whether the CFTC has “exclusive jurisdiction” over prediction markets.
• Gaming and tribal groups are separately pushing Congress for clearer rules through the CLARITY Act.

Expanded allegations in the Massachusetts case

The Tuesday ruling clears the way for Massachusetts authorities to strengthen their claims as the case continues. According to the court filing, the amended complaint builds on earlier allegations that Kalshi engaged in sports wagering in a way that violates state law.

The state’s updated pleading includes accusations that the platform “targets those under 21 years of age” and does not do enough to prevent underage users from accessing the product. The complaint points to Kalshi’s marketing practices and to ad creative that, the filing alleges, shows individuals who appear younger than 21.

Massachusetts authorities also reiterated that Kalshi permits users from age 18 to create accounts and place wagers on sports events by purchasing event contracts, framing that accessibility as incompatible with the state’s approach to online sports wagering.

How the dispute started—and what the judge previously ordered

Massachusetts Attorney General Andrea Joy Campbell announced the lawsuit in September 2025, arguing that Kalshi needed to be licensed by the Massachusetts Gaming Commission to comply with state rules governing online sports wagers.

Earlier developments escalated the dispute quickly. In January, a judge issued a preliminary injunction barring Kalshi from offering sports event contracts while the case was reviewed.

With the latest amended complaint allowed by the court, Kalshi now faces a more detailed version of the state’s allegations as it continues fighting the legality of its sports contracts under Massachusetts law.

Cointelegraph reached out to Kalshi for comment, but did not receive an immediate response. After the initial complaint was filed, a Kalshi spokesperson had said the company was “ready to defend” itself in court.

The federal-versus-state jurisdiction fight over prediction markets

The Massachusetts case is only one part of a broader regulatory tug-of-war in the US. In parallel with state-level enforcement efforts, the CFTC has supported the view that prediction markets fall within its authority.

In April, the CFTC filed a brief in Massachusetts arguing that it had “exclusive jurisdiction” over prediction markets. The agency’s position, under Chair Michael Selig, is that event contracts offered by platforms like Kalshi are “swaps” under the Commodity Exchange Act and therefore should not be governed by state regulation.

As Selig put it in remarks associated with the agency’s stance, Congress has entrusted the CFTC with sole authority to regulate commodity derivatives markets, including prediction markets—and he warned that states attempting to override federal law would face legal challenges.

Why this matters beyond Kalshi: a policy push for the CLARITY Act

Even as the legal arguments could eventually move toward higher courts, some industry and stakeholder groups are urging lawmakers to address the jurisdictional uncertainty with legislation.

Earlier this month, national gaming and tribal organizations and labor groups asked US senators to add language to the Digital Asset Market Clarity (CLARITY) Act. Their request is aimed at explicitly prohibiting event contracts tied to sports and casino-style gaming.

The CLARITY Act—currently under consideration in the Senate—is expected to shape how the CFTC’s authority over digital assets and related market activities is defined. In that context, stakeholders pushing for restrictions on sports and casino-style event contracts are effectively seeking legislative clarity to reduce the need for repeated state-by-state court battles.

Cointelegraph has also reported that the legal landscape for Kalshi and similar platforms has varied by jurisdiction, including instances where the company was blocked from offering sports bets in certain locations.

What to watch next

For market participants and platform users, the next key developments are procedural and strategic: Massachusetts will attempt to sustain its expanded claims after the preliminary injunction, while Kalshi’s defense will likely continue confronting the CFTC’s argument for exclusive federal oversight. At the same time, the direction of the CLARITY Act could determine whether US prediction markets face a patchwork of state litigation or a more uniform regulatory framework.

Key takeaways:

• The Spot Ether ETF outflows overwhelmed BitMine’s ETH accumulation, raising the chance of a drop below the $1,500 support.
• Falling DApps revenue and weak staking yields highlight limited ecosystem incentives despite tokenization potential.

Ether (ETH) has failed to sustain prices above $1,600 since Thursday, following the broader cryptocurrency market’s downtrend. Lower oil prices created a positive tone that fueled investors’ hopes for more expansionist monetary policy. That setup favors stocks and pushes bond yields higher.

Traders now fear that ETH will not hold the $1,500 support level for long. Spot Ether ETF outflows void the impact of accumulation from Ether treasury companies.

ETH/USD (orange) vs. Total crypto market cap (blue). Source: TradingView

Ether price has declined 31% since May and underperformed the total cryptocurrency market capitalization by 8% over that period. US-listed Ether ETFs saw $345 million in net outflows since June 17, which more than offset the $182 million in ETH accumulation from BitMine Immersion (BMNR US) and Sharplink (SBET US) during the same period.

Regulatory setbacks, AI competition and weak Ethereum onchain metrics

Several factors appear to have held back investor appetite, including regulatory uncertainty in the United States. Meanwhile, the stock market continues to draw attention thanks to strong earnings and lower inflation expectations.

The Digital Asset Market CLARITY Act has awaited a Senate vote since May 15. The bill ends regulation-by-enforcement and clarifies which tokens count as securities. Yet it has faced pushback from lawmakers over provisions regarding stablecoin yields and anti-money-laundering standards.

Democratic lawmakers voiced ethical concerns about the Trump family’s ties to crypto and its role in the World Liberty Financial platform. Most view the CLARITY Act as a positive catalyst for the decentralized finance (DeFi) sector. So ongoing uncertainty around approval hurts institutional demand for ETH.

The artificial intelligence sector now competes with blockchain for data processing as cloud providers deliver services through agentic architectures. Enterprise software leader SAP (SAP DE) has integrated autonomous, modular AI agents natively across multi-vendor clouds, enabling peer-to-peer collaboration.

Ether investors also feel disappointment from stagnant Ethereum network fees and decentralized applications (DApps) revenues. As a result, ETH supply becomes inflationary, staking yields remain limited, and fewer incentives exist for ecosystem growth, since part of DApps’ revenue flows back to users.

Ethereum monthly network chain fees vs. DApps revenue, USD. Source: DefiLlama

Ethereum network fees reached only $10.7 million in June, down from $24.4 million in April. DApps revenue hit $51.7 million in June, down from $64.8 million two months earlier. Top contributors included Sky (formerly Maker) at $12.7 million, Titan Builder at $7.2 million, and Chainlink at $4.6 million.

Ethereum supporters argue that tokenization remains in its early innings. The long-term growth potential should create enough blockchain demand to support a much higher ETH valuation.

Related: Ether treasury Sharplink bought $62.4M ETH last week

Ethereum real world assets (RWA) active market capitalization, USD. Source: DefiLlama

While real world assets (RWA) show real promise, the $14.5 billion in tokenized market cap on Ethereum has yet to spark meaningful DeFi activity. With a 2.7% staking yield and weak onchain metrics, the odds of ETH breaking below $1,500 remain in play.

Prediction markets platform Kalshi’s legal battle against Massachusetts will continue after a judge ruled that state authorities could add allegations against the company over sports betting.

In a Tuesday filing in Suffolk County Superior Court, associate justice Peter Krupp allowed state authorities to file a 71-page amended complaint, building on a filing alleging that Kalshi engaged in sports wagering in violation of state laws. 

The amended complaint included allegations that Kalshi “targets those under 21 years of age and does little to stop them from using its platform,” citing the company’s marketing to university campuses and presenting images in ads of people who “appear to be younger than 21 years old.”  

“Kalshi allows anyone who is at least 18 years old to create an account and wager on sports events by purchasing event contracts,” alleged Massachusetts authorities.

Source: Massachusetts Superior Court

Massachusetts Attorney General Andrea Joy Campbell announced the lawsuit against Kalshi in September 2025, alleging that the company needed to be licensed by the Massachusetts Gaming Commission to comply with state laws on online sports wagers. In January, a judge granted a preliminary injunction barring Kalshi from offering sports event contracts as the case was under review.

Related: US senators push to end CFTC ‘assault’ on state oversight of prediction markets

The Massachusetts case is just one of many involving state-level authorities and prediction markets companies like Kalshi and Polymarket, who offer users the ability to trade using event contracts on a variety of outcomes related to sports, politics and current events. 

While Kalshi has been blocked from offering sports bets in some jurisdictions, it also has support from the US Commodity Futures Trading Commission (CFTC), which in April filed a brief in Massachusetts arguing the agency had “exclusive jurisdiction” over prediction markets. The CFTC, under Chair Michael Selig, has claimed that event contracts on the platforms amount to “swaps” covered by the Commodity Exchange Act and were not subject to state regulation.

“Congress has entrusted the CFTC with the sole authority to regulate commodity derivatives markets, including prediction markets,” said Selig. “To any state that seeks to nullify federal law and seize authority over these markets, I say again: we will see you in court.”

Cointelegraph reached out to Kalshi for comment but did not receive an immediate response. Following the initial complaint in September, a spokesperson said that the company was “ready to defend” itself in court.

Gaming organizations look to CLARITY Act for clarity on prediction markets

While one of the cases between a prediction markets platform and US state authority could ultimately reach the US Supreme Court given the arguments over federal and state laws, some groups are looking to Congress for solutions.

Earlier this month, national gaming and tribal organizations and labor groups called on US senators to add language “that explicitly prohibits event contracts tied to sports and casino-style gaming” to the Digital Asset Market Clarity (CLARITY) Act. The bill, under consideration in the Senate, is expected to give the CFTC more regulatory authority over digital assets.

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