Author: James Butterfill, Source: CoinShares Research, Translated by: Shaw Jinse Finance
Over the past two years, Digital Asset Treasuries (DAT) companies have become one of the most watched sectors in the cryptocurrency market . This is also a topic we frequently discuss in depth, as CoinShares operates a blockchain stock index. With the rapid growth of the DAT sector and its reputation, its positioning has become increasingly blurred. The recent market correction has put pressure on some large DATs, making it necessary to re-examine the original intentions and development history of DATs, and what the recent market downturn and shrinking net asset value mean for their future development.
The original intention and core positioning of DAT
To understand the current situation, we need to revisit the initial motivations behind DAT's creation. DAT's core objective was to serve multinational corporations with multi-currency revenue streams who needed to manage funds and foreign exchange risks . For these companies, Bitcoin offered a highly attractive hedging tool, effectively mitigating the risks of quantitative easing, rising government debt, and long-term currency devaluation. Including Bitcoin on their balance sheets was not speculation, but a financial management strategy, as evidenced by Strategy's initial announcement in August 2020. Furthermore, this aligns with the growing interest of many enterprises in distributed ledger technology and the potential efficiency gains from integrating blockchain infrastructure into existing operations.
Strictly speaking, DAT (Digital Assets and Cryptocurrencies) simply refers to companies that hold Bitcoin or other crypto assets on their balance sheets. The market has gradually established an implicit threshold: a company must hold a significant proportion of cryptocurrency (typically above 40% of net assets) to be classified as a DAT . As cryptocurrency purchases accelerate and valuations soar, they often obscure a company's core business. Strategy is a prime example: an initiative initially intended to diversify funding actually became a leveraged Bitcoin investment vehicle . Many new entrants followed suit, issuing shares not to grow their businesses, but to accumulate more digital assets. However, over time, this diminished interest and capital inflows into the sector, raising questions about the sustainability of these strategies. Subsequently, these companies began utilizing every available financing channel to rapidly increase their cryptocurrency holdings, hoping that rising prices would compensate for insufficient growth in their core businesses.
DAT Behavior Logic and Challenges During Market Correction
The recent correction in the cryptocurrency market exposed these structural flaws . Several factors contributed to the decline, including a lack of robust operational support for its cash management strategies, the diversion of funds to other blockchain-related stock investments (such as mining), and the overall decline in cryptocurrency prices. For many such companies, their traditional businesses are unprofitable, which can create selling pressure, although this pressure is usually small relative to their digital asset holdings. Bitmine (BMNR) is a prime example: in its last fiscal quarter, the company's operating cash outflow was only $5 million, while its Ethereum (ETH) reserves were worth over $10 billion. Similarly, Japan-based Metaplanet's operating cash flow is negligible compared to its $2.7 billion worth of Bitcoin holdings.
On the other hand, dividend and interest payments could lead to more pressing selling pressure , especially given the scarcity of liquid fiat currency resources. However, most DATs are financed through stock issuances, resulting in relatively low debt burdens. The sole exception is Strategy, which has $8.2 billion in outstanding debt and has issued $7 billion in dividend-paying preferred stock. Strategy's debt generates approximately $800 million in cash flow commitments annually, which the company has funded through further financing. To allay concerns about its solvency, Strategy again invoked its market offering (ATM) mechanism, issuing $1.4 billion as reserves to pay preferred stock dividends and interest. DAT companies will utilize all available means to avoid selling their digital asset reserves, and so far, the major DAT companies we follow have not made any large-scale sales this year.
However, the question remains: what happens when mNAV (market capitalization to net asset value) falls below 1? Contrary to popular belief, this scenario isn't entirely hopeless. Companies holding cryptocurrency can still increase their cryptocurrency holdings per share by reversing their accumulation strategies. In this scenario, the company would sell cryptocurrency and buy back shares, thereby increasing the token holdings per share. While this approach makes sense, we believe that management teams striving to scale their businesses are unlikely to actively reduce their cryptocurrency holdings, potentially leading to stagnant growth in their holdings until the funding environment improves. Finally, companies trading below their cryptocurrency net asset value could become attractive acquisition targets, as well-funded companies might see them as a way to acquire digital assets below cost.
Has the DAT bubble burst?
In many ways, this is indeed the case. In the summer of 2025, many of these companies were trading at 3, 5, or even 10 times their net asset value, while now they are hovering around 1 times or even less. The market will then diverge: either a price drop will trigger a disorderly sell-off, leading to a market crash; or companies will continue to hold their assets, waiting for prices to recover . We lean towards the latter, especially given the improving macroeconomic backdrop and the potential for an interest rate cut in December, which will provide broader support for the cryptocurrency market.
However, in the long run, the DAT model needs to evolve . Investors will become less tolerant of equity dilution and highly concentrated assets lacking substantial revenue streams. The original intention of quality companies to diversify fiat currency risk has been obscured by companies that have used the public stock market to build massive assets rather than develop genuine businesses, which has undermined the credibility of the entire industry.
Encouragingly, a number of more established companies are beginning to include Bitcoin on their balance sheets for strategic purposes. However, by the current informal definition, these companies should not be considered DATs at all. Ironically, those companies that best fit the original intent of currency hedging/foreign exchange management strategies, such as Tesla, Trump Media Group, and Block Inc., are currently excluded from this label.
Future Development Direction of DAT Concept
The bursting of the DAT bubble does not signify the end of the DAT concept. On the contrary, we expect a market readjustment. Investors will increasingly differentiate between the following points:
- Speculative DAT : The core business is secondary; its value depends almost entirely on the amount of tokens held.
- Asset-reserve oriented DAT : Using Bitcoin or other digital assets as part of a rigorous foreign exchange and cash reserve strategy.
- Token investment companies : These are companies that hold diversified portfolios of tokens and may resemble closed-end funds rather than traditional companies.
- Strategic companies : Add Bitcoin to their balance sheets as a macro hedging tool, but do not seek to be classified as DAT.
The past year's experience has shown that the term "DAT" can represent everything at the same time, or it can represent nothing at all. Therefore, the industry will move towards a clearer classification.
in conclusion
The emergence of DAT stemmed from a sound idea: companies diversifying their cash reserves by shifting from fiat currency to digital assets . However, the rapid expansion of token reserves, equity dilution, and the relentless pursuit of increasing the number of tokens per share undermined this initial intention. With the bursting of the bubble, the market is reassessing which companies truly embody the DAT model and which are merely riding the wave .
The future of DAT lies in returning to fundamental principles: rigorous financial management, a reliable business model, and a realistic expectation of the role of digital assets on the corporate balance sheet . The next generation of DAT companies will be closer to the originally envisioned model: stable, global operations, and the strategic rather than speculative use of digital assets.
