Key Points
- As bitcoin’s price falls, “digital asset treasury” (DAT) companies are shifting to more volatile and less popular tokens.
- This trend connects the speculative crypto world with traditional markets, creating new risks for investors.
- Many of these companies are funded through private placements, making them vulnerable to market downturns.
- Several DAT companies are now trading below the value of their crypto holdings, leading to significant losses for retail investors.
As companies that stockpile bitcoin and other major cryptocurrencies face pressure from a saturated market and declining sentiment, new players are entering less popular tokens, raising concerns about increased volatility.
Encouraged by President Donald Trump’s crypto-friendly policies and inspired by the huge success of Michael Saylor’s company, Strategy, the number of publicly traded companies investing in cryptocurrencies has boomed. As of September, there were at least 200 “digital asset treasury” (DAT) companies with a combined market value of around $150 billion, more than three times the number from a year earlier.
More companies, many of them penny stocks, are jumping in daily. But as bitcoin’s price has dropped, they are now turning to more obscure, volatile tokens to boost their returns, according to a Reuters analysis. For example, in recent weeks, companies like Greenlane, OceanPal, and Tharimmune announced plans to stockpile BERA, NEAR, and Canton Coin.
This trend shows how the speculative world of cryptocurrencies is increasingly intertwined with traditional markets, creating new risks for investors. “DATs are expanding towards more exotic and less liquid cryptocurrencies, and that’s exactly where the risk could be much higher,” said Cristiano Ventricelli of Moody’s Ratings.
Many of these DAT companies have funded their token purchases by selling shares directly to private investors, often at a discount. While this gives them quick access to cash, it can also lead to stock price volatility. Because they rely so heavily on these private placements, they are especially vulnerable when the market falls.
Many DAT companies that were once trading at a premium to their crypto holdings are now struggling. As bitcoin has weakened and more copycat companies have flooded the market, at least 15 bitcoin treasury companies were trading below the value of their tokens as of last Friday. Retail investors, who were big buyers of these stocks, lost an estimated $17 billion on these trades, according to one research firm.
DAT companies hold a significant amount of crypto—4% of all bitcoin, for example—meaning their success or failure could have a big impact on coin prices. Some of these companies are now looking for new ways to boost shareholder value, like launching their own stablecoins. One executive warned that if a DAT company just buys tokens and does nothing else, “long term, you’re going to get absolutely decimated.”
