Digital Asset Treasuries are the newest craze in crypto — and potentially its next bubble

Digital Asset Treasury companies — known as DATs or DATCOs — have come under the spotlight as the cryptocurrency market retreats. These firms hold digital assets and use various strategies to try to outperform the underlying cryptocurrencies themselves. But as crypto prices slide, the value of DATs is falling as well, fueling worries that they may soon be forced to sell assets.

DATs have become one of the hottest buzzwords in the crypto sector this year, offering investors a new way to gain exposure to digital currencies — but with added risks. Essentially, a DAT is a publicly traded company that holds assets such as bitcoin or ether and seeks to deliver returns that exceed the performance of those coins.

However, the recent downturn in crypto markets has intensified scrutiny of their strategies and raised concerns about whether DATs could worsen selling pressure in an already fragile environment.

A key question is what happens to DATs during sharp market declines. With bitcoin trading well below its record highs, many DATs are now under pressure. As crypto prices drop, a DAT’s market-adjusted net asset value (mNAV) can fall below 1, meaning the company trades at a discount to its holdings. This creates several challenges.

According to analysts, when a DAT’s stock price approaches or drops below NAV, issuing new shares becomes dilutive — reducing, rather than increasing, the crypto exposure of existing shareholders. This can disrupt the self-reinforcing cycle that typically supports a trading premium.

At the same time, the rapid expansion in the number of DATs and heightened investor interest bring additional risks to the market.