After a tumultuous few weeks in the cryptocurrency market, Digital Asset Trust (DAT) companies are back in the spotlight. For not-so-good reasons.
Bitcoin, Ethereum, and the broader market have plummeted due to macro risks. If the Bank of Japan raises interest rates, there is a possibility that the yen carry trade could unwind. Volatility is increasing, and large-scale liquidations are occurring one after another, with major institutions aggressively taking short positions. This creates the perfect conditions for investor panic.
DAT stocks have been particularly hard hit. Companies that once traded at 3 times, 5 times, or even 10 times their adjusted net asset value (mNAV) are now trading at equal or lower levels. The concern is simple: whether the Treasury will have to sell their cryptocurrency to service loans, defend stock values, or simply maintain solvency as prices fall.
According to James Butterfill, Head of Research at UK cryptocurrency asset management firm CoinShares, the situation is precarious but not without hope.
“During the summer of 2025, many DATs were trading at 3 times, 5 times, or even 10 times their mNAV, and now they are all hovering around 1 time or less. Here, the path diverges: price declines could lead to disorderly disintegration, or companies could maintain their balances and benefit from price recovery. We lean towards the latter. Especially as the macro situation improves and the possibility of a rate cut in December increases, it will provide broader support for the cryptocurrency market.” – James Butterfill, Head of Research
If prices continue to fall, short-sellers may intensify their attacks on companies holding digital assets with particularly low liquidity or high correlations.
December reversal?
Now, it remains to be seen whether DAT companies will fall into a repeat of ruin due to forced selling, or if they are in a preparatory phase for a strong short-selling counterattack. Butterfill believes the latter remains a strong possibility.
“Price declines could lead to disorderly selling, or companies could maintain their balances and benefit from recovery. We lean towards the latter, and a situation where the macro backdrop improves and a rate cut in December is possible will follow.”
The market is approaching a critical moment. Inflation is easing, the bond market has stabilized, and speculation is spreading that central banks may cut rates in December.
Rate cuts can weaken the dollar, relieve liquidity stress, and enable a strong rebound across digital assets.
This may be all that DAT companies need to endure the current storm.
DATs, evolve or die
Even if recovery arrives, Butterfill argues that the industry must confront uncomfortable structural flaws.
“The recent retreat in the cryptocurrency market has exposed its structural weaknesses. There is a lack of robust operating businesses behind the treasury strategies, and a return to other blockchain-related stock investments, along with the overall decline in cryptocurrency prices, has contributed to this.”
Investors have become less tolerant of the following:
Shareholder value dilution
Ultra-high-density asset concentration
Companies with large-scale cryptocurrency vaults without substantial revenues
Companies that gather tokens through the mass market rather than product development
Such actions, he says, have damaged the credibility of the entire sector.
Future DAT models
Butterfill predicts a cleansing cycle that removes momentum-driven companies and rewards those that create real economic value.
“As the bubble deflates, the market is reassessing companies that truly fit the DAT model versus those that were merely riding momentum. The future of DAT lies in returning to fundamentals: disciplined financial management, a reliable business model, and realistic expectations regarding the role of digital assets on corporate balance sheets.”
The winners of the next cycle may look like the DATs that were originally conceived.
Global corporations
Diversified revenue sources
Digital assets used strategically, not opportunistically
Long-term balance sheet management, not speculative financial expansion
If the market stabilizes or turns upward, companies that have weathered the storm instead of liquidating may be well-positioned for a strong recovery. In that environment, asset managers with broad short strategies targeting DAT stocks could be quickly unwound, amplifying upward volatility.
A rate cut in December could be the catalyst.
