After a few tumultuous weeks in the crypto market, Digital Asset Treasury (DAT) companies find themselves back in the spotlight, and not for the hoped-for reasons.
Bitcoin, Ethereum, and the entire market have suffered significant declines due to macroeconomic fears, including a possible unwinding of the yen carry trade if the Bank of Japan raises its rates. Add to that increasing volatility, cascading liquidations, and aggressive short positions from major institutions, and you have the perfect recipe to panic investors.
DAT stocks are particularly affected. Companies that were trading at multiples of their modified net asset value (mNAV) — 3x, 5x, or even 10x during the summer, are now stagnating at parity or below. The fear is simple: as prices fall, will treasuries be forced to sell their crypto to honor their loans, defend the valuation of their stocks, or simply remain solvent?
According to James Butterfill, director of research at CoinShares, the situation is fragile but not desperate.
“During the summer of 2025, many DATs were trading at 3x, 5x, or even 10x their mNAV and are now all around 1x or even less. From there, the future diverges: either the price drop triggers a disorderly unwinding due to aggressive selling, or companies hold their reserves and benefit from a potential price recovery. We lean towards the second option, especially considering the improvement in the macroeconomic context and the possibility of a rate cut in December, which would more broadly support crypto markets.”
If prices continue to fall, short positions could deepen their attack, particularly on companies whose treasuries hold large reserves of illiquid or highly correlated digital assets.
A turnaround in December?
The question now is whether DAT companies are facing a forced selling spiral… or an explosive short squeeze. Butterfill believes that the second option remains a strong possibility.
“Either the price drop triggers a disorderly unwinding due to aggressive selling, or companies hold their reserves and benefit from a potential price recovery. We lean towards the second option, especially considering the improvement in the macroeconomic context and the possibility of a rate cut in December, which would more broadly support crypto markets.”
Markets could be approaching a decisive moment. Inflation is cooling, bond markets have stabilized, and speculation is rife that central banks, including the Fed, could announce a rate cut in December.
Such a decline would weaken the dollar, reduce liquidity stress, and could potentially trigger a strong recovery of digital assets.
This could be what DAT companies need to survive the current storm.
DATs must now evolve or die
Even if a recovery occurs, Butterfill argues that the industry must face uncomfortable structural flaws.
“The recent pullback in crypto markets has exposed their structural weaknesses. Several factors have contributed to this decline, including the lack of solid operational companies behind cash strategies, the rotation into other investments related to blockchain, and the general decline in crypto prices.”
Investors have become much less tolerant of:
shareholder dilution
the ultra-high asset concentration
companies with large crypto treasuries but no real source of income
companies that use public markets to accumulate tokens rather than to develop products
This behavior, he says, has harmed the credibility of the entire sector.
The DAT model of the future
Butterfill anticipates a cleaning cycle that will eliminate companies driven by haste and reward those that create genuine economic value.
“With the deflation of the bubble, the market is reassessing which companies truly fit into the DAT model and which were merely riding the wave. The future of DATs lies in a return to fundamentals: disciplined cash management, credible business models, and realistic expectations regarding the role of digital assets in corporate balance sheets.”
The winners of the next cycle, according to him, will look much more like the initially envisioned DATs:
global companies
diversified sources of income
digitally strategic assets, not opportunistic ones
long-term balance sheet management, not speculative cash expansion
If markets stabilize or even recover, companies that have held firm rather than liquidating could find themselves positioned for a strong rebound. In this environment, any asset manager with a broad short strategy targeting DAT stocks could quickly find themselves unwinding, amplifying upward volatility.
A rate cut in December could be the catalyst.
