After some turbulent weeks in the cryptocurrency market, Digital Asset Treasury (DAT) companies have been thrown back into the spotlight, and not for the reasons they had hoped.
Bitcoin, Ethereum, and the broader market have experienced sharp declines due to macroeconomic concerns, including a potential unwinding of the yen carry trade if the Bank of Japan raises interest rates. With rising volatility, cascading liquidations, and aggressive short positions from large institutions, you have the perfect recipe for investor panic.
DAT stocks have been particularly hard hit. Companies that were once traded at multiples of their modified net asset value (mNAV) — 3x, 5x, even 10x over the summer, are now either at or below par. The fear is simple: When prices fall, will tax departments be forced to dump cryptocurrency to manage loans, defend equity values, or simply remain solvent?
According to James Butterfill, head of research at CoinShares, the situation is fragile but not hopeless.
“In the summer of 2025, many DATs were traded at 3x, 5x, or even 10x their mNAV, and now they are all hovering around 1x or even lower. From here, the road splits: either falling prices trigger a disorderly unwinding through aggressive selling, or companies maintain their balance and benefit from a potential rise in prices. We lean towards the latter, especially considering the improving macro backdrop and the possibility of an interest rate hike in December, which would support the cryptocurrency markets more broadly.”
If prices continue to fall, shorts may intensify the attack, particularly against companies whose tax departments hold large, illiquid, or highly correlated digital asset reserves.
A rally in December?
The question now is whether DAT companies face a forced sale doomsday … or the setup for an explosive short squeeze. Butterfill believes the latter is still a strong possibility.
“Either falling prices trigger a disorderly unwinding through aggressive selling, or companies maintain their balance and benefit from a potential rise in prices. We lean towards the latter, especially considering the improving macro backdrop and the possibility of an interest rate hike in December, which would support the cryptocurrency markets more broadly.”
The markets may be heading towards a critical point. Inflation is decreasing, bond markets have stabilized, and speculation is increasing that central banks, including the Fed, may deliver an interest rate hike in December.
An interest rate cut will weaken the dollar, ease liquidity stress, and potentially trigger a strong rally across digital assets.
It may be all that DAT companies need to survive the current storm.
DATs must now evolve — or die
Even if a rally comes, Butterfill argues that the industry must confront uncomfortable structural flaws.
“The recent downturn in the cryptocurrency markets has revealed their structural weaknesses. Several factors contributed to the decline, including the lack of robust operating businesses behind tax strategies, rotation towards other blockchain-related equity investments, and the overall decline in cryptocurrency prices.”
Investors have become far less tolerant of:
shareholder dilution
ultra-high asset concentration
companies with large crypto taxes but no real revenues
Companies that use public markets to accumulate tokens instead of building products
This behavior, he says, has damaged the entire sector's credibility.
The DAT model for the future
Butterfill predicts a cleansing cycle, one that filters out momentum-driven companies and rewards those that build real economic value.
“As the bubble deflates, the market is reassessing which companies truly fit into the DAT model and which are just riding on momentum. The future of DATs lies in returning to fundamentals: disciplined tax management, credible business models, and realistic expectations about the role of digital assets on corporate balances.”
The winners of the next cycle, he says, will resemble far more the DATs that were originally envisioned:
global companies
diversified revenue streams
digital assets used strategically, not opportunistically
long-term balance management, not speculative tax expansion
If the markets stabilize or even turn upwards, companies that held the line instead of liquidating may find themselves positioned for a strong rally. In that environment, any asset managers with a broad short strategy targeting DAT stocks may quickly be unwound, amplifying upside volatility.
An interest rate cut in December could be the catalyst.
