Bankless: The DAT Craze Cools Down

Author: Jack Inabinet, Senior Analyst at Bankless

Translation: @Golden Finance xz

Digital Asset Treasury (DAT) has become one of the explosive phenomena of this crypto cycle.

These listed companies are accumulating crypto assets as a core strategy, investing billions of dollars into selected digital assets—from Bitcoin, Ethereum to Hyperliquid tokens, and even Tether Gold tokens! According to CoinGecko's “2025 Digital Asset Treasury Report,” there were already 142 such companies counted as of October.

Despite the fact that DATs were very popular earlier this year, with their numbers growing exponentially (newcomers using more than a dozen cryptocurrencies to chase the copycat effect of soaring stock prices), most of these stocks have now been marginalized, particularly due to the overall weakness in the crypto market.

This article will delve into the underlying reasons for the continued poor performance of DATs and the risks that such listed companies may pose if the market shifts.

1. Is the growth of DAT slowing down?

The lackluster performance of the crypto market in 2025 is no secret.

Despite being inundated with a large number of seemingly positive headlines at the beginning of the year, as I pointed out last week, the total market capitalization of cryptocurrencies (TOTAL) has still underperformed compared to the stock market benchmark (S&P 500 Index) this year.

The trading prices of mainstream cryptocurrencies Bitcoin and Ethereum have remained basically flat compared to the beginning of the year, while many leading altcoins have experienced indiscriminate plummets—once-popular coins (including ATOM, ENA, PENGU, and WIF) have all seen declines of over 50% this year.

However, while cryptocurrency tokens have been continuously subjected to sell-offs throughout the year, the DAT chart shows a one-sided upward trend, with both the number of companies and the value of their cryptocurrency holdings reflecting this.

In the mid-2025, for underperforming publicly traded companies, transitioning to the DAT model seems like a natural choice: after announcing the transformation, stock prices often rise in response, creating several times the returns for company insiders overnight. Correspondingly, the selected cryptocurrencies gain a new source of price-insensitive demand from DATs — these DATs will accumulate tokens as much as possible.

Despite the fact that this positive-sum relationship incentivized a large number of companies to adopt DAT strategies in 2025, the fervor is cooling off. The stock prices of new DAT projects are now predictably plummeting within days after launch, with some even dropping below their pre-transformation prices…

For example, Bitcoin Magazine CEO David Bailey's Nakamoto (a Bitcoin treasury company, stock code NAKA) has continued to hit historic lows just six months after becoming DAT. The stock is now down 81% from its pre-transformation price and down about 99% from its historical peak (which was set ten days after the DAT announcement).

A more recent case is Forward Industries (a Solana treasury company established in early September, directly supported by the largest institutional investors in the blockchain, including Multicoin Capital, Galaxy Digital, and Jump Crypto). Its stock price has fallen 75% from its historical high (set seven days after the DAT announcement) and is now 33% lower than the price before the transformation.

The disillusionment of DAT is evident in various asset data, as the scarcity premium that once belonged exclusively to blue-chip stocks Strategy (MSTR) seems to be dissipating along with the subsequently homogenized DATs.

2. DAT Risk

DAT stock can be likened to a call option for holding cryptocurrencies: the token price must be above a specific threshold on a certain future date, or the stock will lose its value—because the reserve assets must be liquidated to repay the debt.

The new DAT project has so far not been affected by the generally sluggish liquidity in the cryptocurrency market. However, the prolonged stagnation of cryptocurrency prices has begun to trouble the valuation of this inherently time-sensitive industry.

DAT amplifies potential returns for shareholders through borrowing. This strategy is sensible when the token performs better than the US dollar, but if the situation is reversed, leverage will quickly threaten shareholder returns.

Technically, DAT cannot be “liquidated” because its leverage is generated through the issuance of fixed-term debt (which does not need to be repaid before maturity). However, this does not mean that DAT will not sell its crypto reserves.

ETHZilla, supported by Peter Thiel, sold $40 million worth of Ethereum reserves last month to buy back shares from investors. Similarly, Sequans, supported by Swan, sold 970 BTC last week to repay debt early, becoming the first case of a BTC class DAT liquidation reserve.

In addition, although many members of the current management team of DAT have stated that they have no intention of selling their cryptocurrency reserves, as a publicly traded company with shareholder rights, DAT may be forced to liquidate its treasury assets in the event of a hostile takeover.

The crypto-native sector is no stranger to “risk-free value” treasury raids: by acquiring a majority stake in distressed DeFi protocols, the intention is to liquidate their treasury assets to obtain a value higher than that of the protocol itself.

If these more than a hundred DATs that you have never heard of are trading at a deep discount relative to their net asset value (NAV) due to existing shareholders' disappointment with profitability, other investors may take advantage of this situation—this time they expect to profit quickly through liquidation, which may further drag down the price of the underlying tokens.