After a few stormy weeks in the cryptocurrency markets, Digital Asset Treasury (DAT) companies are back in the spotlight, and not for the reasons they had hoped.
Bitcoin, Ethereum and broader markets have suffered sharp declines due to macroeconomic fears, including a potential unwinding of the yen carry trade if the Bank of Japan raises interest rates. When combined with rising volatility, liquidation chains, and large institutions' aggressive short selling, this creates a perfect recipe for investor panic.
DAT stocks have suffered particularly badly. Companies that once traded at multiples of modified net asset values (mNAV) — in the summer 3x, 5x, or even 10x, have now dwindled close to parity or below. The fear is simple: when prices fall, will cash positions be forced to sell their cryptocurrencies to service loans, defend their equity valuations, or simply to remain solvent?
James Butterfill, Head of Research at CoinShares, noted that the situation is fragile but not doomed.
“In the summer of 2025, many DATs traded at 3x, 5x, or even 10x their mNAV values, and now they are all moving at around 1x or even lower. From here, the path diverges: either falling prices trigger an unorganized unwind through aggressive selling, or companies hold onto their assets and benefit from a potential price recovery. We lean towards the latter, especially given the improving macro environment and the potential rate cut in December, which would support the crypto markets more broadly.”
If prices continue to fall, short sellers may deepen their attack, especially in companies whose reserves include large, illiquid, or highly correlated digital assets.
December turnaround?
The question now is whether DAT companies face the judgment of forced selling… or an explosive short-selling squeeze. Butterfill believes the latter is a strong possibility.
“Either falling prices trigger an unorganized unwind through aggressive selling, or companies hold onto their assets and benefit from a potential price recovery. We lean towards the latter, especially given the improving macro environment and the potential rate cut in December, which would support the crypto markets more broadly.”
The markets may be at a turning point. Inflation is cooling, bond markets have stabilized, and speculation is growing that central banks, including the Fed, could cut rates in December.
A rate cut would weaken the dollar, ease liquidity pressures, and could trigger a strong recovery in digital assets.
This could be all that DAT companies need to weather the current storm.
DATs must now evolve — or die
Even if recovery arrives, Butterfill argues that the industry must confront uncomfortable structural weaknesses.
“The recent withdrawal from the crypto markets has exposed their structural weaknesses. Several factors contributed to the decline, including a lack of stable business operations behind cash strategies, a shift to other blockchain-related equity investments, and the overall decline in crypto prices.”
Investors have become much less tolerant:
for shareholder dilution
extreme concentration of assets
for companies with large crypto holdings but no real revenue
Companies that use public markets to raise tokens instead of building products
This behavior, he says, has harmed the credibility of the entire sector.
Future DAT model
Butterfill predicts a cleansing cycle that filters out momentum-driven companies and rewards those that build real economic value.
“As the bubble deflates, the markets will reassess which companies truly fit the DAT model and which merely exploited momentum. The future of DATs lies in a return to fundamentals: disciplined cash management, credible business models, and realistic expectations about the role of digital assets in the company's balance sheet.”
The winners of the next cycle look much more like the original DAT:
Global companies
Diversified revenue streams
Strategically used digital assets, not opportunistically
Long-term balance sheet management, not speculative cash investment expansion
If the markets stabilize or even turn upwards, companies that held the line instead of liquidating may find themselves facing a strong recovery. In that environment, all asset managers with a broad short-selling strategy targeting DAT stocks could quickly unwind, adding upward volatility.
A rate cut in December could act as a catalyst.
