After a few turbulent weeks in the crypto market, Digital Asset Treasury (DAT) companies have found themselves in the spotlight again, but not for the reasons they had hoped.
Bitcoin, Ethereum, and the broader market have suffered sharp declines due to macroeconomic concerns, including a potential unwinding of yen-carry trades if the Bank of Japan raises interest rates. Added to this are increasing volatility, cascading liquidations, and aggressive short positioning from large institutions leading to investor panic.
DAT stocks have been hit particularly hard. Companies that were previously traded at multiples of their modified net asset value (mNAV) — 3x, 5x, even 10x during the summer, are now at or below parity. The fear is simple: when prices fall, will financial managers be forced to sell their crypto to pay loans, defend stock valuations, or simply survive?
According to James Butterfill, head of research at CoinShares, the situation is fragile but not doomed.
“During the summer of 2025, many DATers traded for 3x, 5x, or even 10x their mNAV and are now all around 1x or lower. Here the road splits: Either falling prices trigger a disorderly unwind through aggressive sell-offs, or companies hold onto their balances and benefit from a potential price recovery. We lean toward the latter, especially considering the improved macroeconomy and the possibility of an interest rate cut in December, which would support crypto markets more broadly.”
If prices continue to fall, short positions may deepen their attack, especially on companies whose treasuries hold large, illiquid, or highly correlated digital asset reserves.
A turnaround in December?
The question now is whether DAT companies face the death of forced selling... or a setup for an explosive short squeeze. Butterfill believes the latter remains a strong possibility.
“Either falling prices trigger a disorderly unwind through aggressive sell-offs, or companies hold onto their balances and benefit from a potential price recovery. We lean toward the latter, especially considering the improved macroeconomy and the possibility of an interest rate cut in December, which would support crypto markets more broadly.”
Markets may be approaching a decisive moment. Inflation is dropping, bond markets have stabilized, and speculation is growing that central banks, including the Fed, may deliver an interest rate cut in December.
A cut would weaken the dollar, reduce liquidity pressures, and potentially trigger a strong recovery across digital assets.
It could be all that DAT companies need to survive the current storm.
DATs must now evolve — or die
Even if a recovery comes, Butterfill argues that the industry must confront uncomfortable structural flaws.
“The recent decline in the crypto markets has exposed their structural weaknesses. Several factors contributed to the decline, including the lack of robust operational businesses behind cash strategies, rotation towards other blockchain-related equity investments, and the overall decline in crypto prices.”
Investors have become much less tolerant of:
equity dilution
extremely high asset concentration
companies with large crypto cash reserves but no real revenues
companies using public markets to gather tokens instead of building products
This behavior, he says, has damaged the credibility of the entire sector.
The DAT model for the future
Butterfill anticipates a cleansing cycle, one that filters out momentum-based companies and rewards those that build real economic value.
“As the bubble deflates, the market reassesses which companies truly fit into the DAT model and which ones merely rode the momentum. The future of DATs lies in returning to fundamentals: disciplined cash management, credible business models, and realistic expectations about the role of digital assets on corporate balance sheets.”
The winners in the next cycle, he says, will look much more like the DATers originally envisioned:
global companies
diversified revenue streams
digital assets are used strategically, not opportunistically
long-term balance sheet management, not speculative cash expansion
If markets stabilize, or even turn upward, companies that held the line instead of unwinding and selling may be well-positioned to recover strongly. In such an environment, any managers with a broad short strategy targeting DAT stocks may quickly unwind and amplify upward volatility.
An interest rate cut in December could be the catalyst.
