After a turbulent few weeks in the crypto market, Digital Asset Treasury (DAT) companies have been thrust back into the spotlight, and not for the reasons they’d hoped.
Bitcoin, Ethereum, and the broader market have suffered sharp declines amid macro fears, including a potential unwind of the yen carry trade if the Bank of Japan lifts rates. Add rising volatility, cascading liquidations, and aggressive short positioning from major institutions, and you get the perfect recipe for investor panic.
DAT stocks have been hit especially hard. Companies that once traded at multiples of their modified net asset value (mNAV) — 3x, 5x, even 10x over the summer, are now languishing at or below parity. The fear is simple: as prices fall, will treasuries be forced to dump their crypto to service loans, defend equity valuations, or simply stay solvent?
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According to James Butterfill, Head of Research at CoinShares, the situation is fragile, but not doomed.
“During the summer of 2025, many DATs were trading at 3x, 5x, or even 10x their mNAV and are now all hovering around 1x or even lower. From here, the path splits: either declining prices trigger a disorderly unwind via an aggressive sell-off, or companies hold on to their balances and benefit from a potential recovery in prices. We lean toward the latter, especially given the improving macro backdrop and the possibility of a December rate cut, which would support crypto markets more broadly.”
If prices continue to slide, shorts could deepen their attack, especially on companies whose treasuries hold large, illiquid, or highly correlated digital asset reserves.
A December Turnaround?
The question now is whether DAT firms face a forced-selling doom loop… or the setup for an explosive short squeeze. Butterfill believes the latter remains a strong possibility.
“Either declining prices trigger a disorderly unwind via an aggressive sell-off, or companies hold on to their balances and benefit from a potential recovery in prices. We lean toward the latter, especially given the improving macro backdrop and the possibility of a December rate cut, which would support crypto markets more broadly.”
Markets may be approaching a pivotal moment. Inflation is cooling, bond markets have stabilised, and speculation is growing that central banks, including the Fed, could deliver a rate cut in December.
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A cut would weaken the dollar, ease liquidity stress, and potentially trigger a strong rebound across digital assets.
That may be all DAT companies need to survive the current storm.
DATs Must Now Evolve — or Die
Even if a recovery arrives, Butterfill argues the industry must confront uncomfortable structural flaws.
“The recent pullback in crypto markets has exposed their structural weaknesses. Several factors contributed to the decline, including the lack of robust operating businesses behind treasury strategies, rotation towards other blockchain-related equity investments, and the overall decline in crypto prices.”
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Investors have grown far less tolerant of:
- shareholder dilution
- ultra-high asset concentration
- firms with large crypto treasuries but no real revenue
- Companies using public markets to accumulate tokens rather than build products
This behaviour, he says, has damaged the entire sector’s credibility.
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The DAT Model of the Future
Butterfill predicts a cleansing cycle, one that filters out momentum-driven firms and rewards those building real economic value.
“As the bubble deflates, the market is re-evaluating which companies genuinely fit the DAT model and which were simply riding momentum. The future of DATs lies in returning to fundamentals: disciplined treasury management, credible business models, and realistic expectations about the role of digital assets on corporate balance sheets.”
The winners of the next cycle, he says, will look far more like the DATs originally envisioned:
- global companies
- diversified revenue streams
- digital assets used strategically, not opportunistically
- long-term balance sheet management, not speculative treasury expansion
If markets stabilise, or even turn upward, companies that held the line instead of liquidating may find themselves positioned for strong recovery. In that environment, any asset managers that have a broad short strategy targeting DAT stocks could rapidly unwind, amplifying upside volatility.
A December rate cut could be the catalyst.
