When companies began to buy Ether on behalf of their balance sheets, investors celebrated. They were hopeful that the popularity of the Bitcoin treasury trade would spill over into the second largest crypto.

But despite some early euphoria, the Ethereum treasury boom isn’t looking very auspicious.

Digital asset treasury companies purchased just 370,000 Ether in November, down 81% from August’s peak of 1.97 million, according to data from Bitwise.

The collapse marks the unwinding of what was supposed to be this cycle’s version of an “altseason.”

“Treasuries were this cycle’s version of an altseason, and the same pattern is now playing out similar to previous cycles,” Max Shannon, senior research associate at Bitwise, told DL News.

“As more alternatives emerge, the same pool of capital cannot sustain demand.”

In July, Ethereum treasuries exploded in popularity when companies began copying Strategy’s Bitcoin playbook. Bitmine, led by Wall Street strategist Tom Lee, took the lead, and continues to be one of the few firms that continues to buy.

Lee’s company now holds more Ether than every single of the other 68 treasuries companies combined.

The model, however, is collapsing. Premiums are compressing, purchasing power is evaporating, and smaller players face extinction. And while treasury purchases still exceed Ethereum’s 80,000 monthly supply, the gap with buyers is shrinking fast.

A winner-takes-most scenario is also increasingly becoming reality.

The unwind is underway

For Shannon, if treasury buying continues to decline while supply remains constant, the structural bid for Ether will disappear.

“As long as the net difference between DAT purchases and new ETH supply remains positive, the DAT theme continues to provide a structural bid,” Shannon said.

“This pressure is already visible in falling mNAVs and shrinking coin purchases.”

mNAV is short for market-cap-to-net-asset-value multiple. It tells you how much equity value you’re paying for every $1 of crypto the company holds.

The math is simple. Ethereum treasury purchases collapsed to 370,000 in November from 1.97 million ETH in August. Meanwhile, new Ether coming into the market remains constant at roughly 80,000 per month.

Basically, purchases still exceed supply, but not for long.

“The unwind is underway,” said Shannon.

Winner takes most

Much like the Bitcoin treasury trade, Ethereum is largely dominated by one big player: Bitmine.

This little-known miner turned Ethereum treasury holds over 3.73 million Ether, worth nearly $13 billion, which translates to more than fourfold its nearest competitor, SharpLink Gaming.

Bitmine’s war chest is also larger than all other Ethereum treasuries combined.

Shannon expects this concentration to accelerate.

“The largest DATs, backed by deeper capital markets, are best placed to raise funds, buy more ETH, and draw in greater external capital, reinforcing the cycle” he wrote.

Smaller treasuries face a death spiral. Without the capital markets access that Bitmine enjoys, they can’t raise funds to buy more ETH.

Without buying more ETH, they can’t attract external capital. Their premiums compress, making equity raises more dilutive, further limiting their ability to accumulate.

“Smaller DATs may struggle to survive and behave more reflexively during ETH rallies,” Shannon told DL News.