Digital Asset Treasury (DATs) Hidden Concerns Behind the Prosperity: Which Tokens Pose the Greatest Risks?

Digital Asset Treasury (DATs) thrives during a bull run, but its leverage operations and premium trading models hide risks. When the market reverses, it may trigger a chain of dumping, and this article will analyze which tokens face the greatest threats. This article is derived from Anthony DeMartino – ADM’s writing, organized, translated, and authored by Janna, ChainCatcher. (Background: Interest rate cuts, DAT, and the selling wave, has the crypto bull run peaked or is it still midway?) (Background supplement: The rise of DAT digital treasury: from holding Bitcoin to yield management) During the crypto bull run, the stock of DATs often sees significant increases, and there is a substantial premium relative to its net asset value (NAV). Since the beginning of this year, digital asset treasury companies have rapidly developed as typical representatives in the wave of coin-stock integration. However, such treasury-type companies expose certain vulnerabilities while injecting liquidity into mainstream assets like Bitcoin and Ethereum. This article draws from an analysis by Anthony DeMartino, founder of Sentora and general partner of the venture capital firm Istari, on the potential risks behind the prosperity of DATs. The following is the original text: In 2025, a new type of listed company has attracted widespread attention from investors: Digital Asset Treasury (DATs). These entities typically use cryptocurrencies like Bitcoin as core reserve assets, raising over $15 billion this year alone, surpassing the scale of traditional venture capital in the crypto space. This trend is driven by companies like MicroStrategy, gradually gaining momentum as more enterprises accumulate digital assets through the public market. Although this strategy yields huge returns during the bull run, it also carries inherent risks that could lead to painful margin calls, further exacerbating volatility in both the stock market and the crypto market. (1) The operation model of DATs The establishment of DATs usually relies on innovative financing structures, including reverse mergers (reverse mergers) with NASDAQ-listed shell companies (NASDAQ-listed shells). This approach allows private entities to go public quickly without undergoing the strict scrutiny of a traditional IPO (IPO). For example, in May 2025, Asset Entities and Strive Asset Management established a Bitcoin-focused treasury-type company through a reverse merger. Other cases include Twenty One Capital, supported by SoftBank (SoftBank) and Tether (Tether), which created a $3.6 billion Bitcoin investment vehicle through a reverse merger with Cantor Equity Partners. After going public, these companies raise capital through stock issuance and invest almost all raised funds into digital assets. Their core mission is very clear: to buy and hold cryptocurrencies such as Bitcoin, Ethereum, SOL, XRP, and even TON. This model realizes the cross-integration of traditional finance and cryptocurrency, providing investors with an investment vehicle to gain ‘leverage exposure’ without directly holding assets. (2) Stock price increases and premium trading During the crypto bull run, the stock of DATs often experiences significant increases and has a substantial premium relative to its net asset value (NAV). As a benchmark company of this model, MicroStrategy’s stock price once had a premium of over 50% compared to its Bitcoin NAV, and recently its multiple NAV (mNAV) ratio reached 1.56. This premium formation stems from several factors: first, these companies can access low-cost public market funds; second, investors’ enthusiasm for leveraged bets on cryptocurrencies; third, the market views such companies as vehicles to amplify stock returns. When the stock price exceeds NAV, the dilution effect of raising $1 for shareholders is less than the value increment brought by asset purchases, thus forming a virtuous cycle. In 2025, listed companies and investors collectively acquired over 157,000 Bitcoins (worth over $16 billion), further driving this momentum. Stocks of companies like Metaplanet, Bitmine, and SharpLink have all seen significant increases, often surpassing the price increases of their underlying cryptocurrencies. (3) Leveraging: Adding fuel to the fire As the premium persists, DATs tend to leverage to amplify returns. They issue convertible bonds or additional stock to purchase more digital assets, essentially borrowing against future appreciation. For instance, MicroStrategy extensively uses convertible notes, with its debt accounting for 11% of its Bitcoin NAV. This strategy amplifies returns in a rising market but poses huge risks to the company during market downturns. Leverage reduces the company’s resilience to shocks, potentially triggering margin calls or forced selling. Its appeal is evident: in a rising market, leverage can turn moderate cryptocurrency gains into explosive stock performances. However, the inherent high volatility of digital assets may lead to rapid depreciation of asset values. (4) Inevitable declines: From premium to discount The high volatility of the crypto market is well known; when cryptocurrency prices fall, the stock price of DATs may decline even more. If the price drops too quickly, or if market confidence in such companies weakens, the premium of the stock price relative to NAV may quickly turn into a discount. Leverage positions further exacerbate this issue: a decline in NAV will force companies to de-risk, creating a volatility trap where bets that originally amplified returns may turn into greater losses for holders. A stock price discount relative to NAV signifies market doubts about the company’s ability to manage assets or cover operating costs during asset value declines. Without intervention, a chain reaction may occur: loss of investor confidence, rising borrowing costs, and potential liquidity crises. (5) Choices in a crisis: Three paths forward Assuming a DAT has sufficient cash reserves to cover operating costs, it mainly faces three choices when trading at a discount: 1. Maintain the status quo: The company continues to hold assets, waiting for a market rebound. This method preserves cryptocurrency holdings but may lead to long-term dissatisfaction among shareholders, further exacerbating stock price declines. So far, Strategy companies have persisted in not selling Bitcoin during multiple bear markets. 2. Peer acquisition: If the discount significantly widens, some speculative buyers (typically other DATs) may acquire the company at a low price, essentially purchasing its underlying tokens at below market value. This would drive industry consolidation but also release demand early, weakening new buying flows, which is also one of the core drivers of the current bull run. 3. Sell assets to repurchase stock: The company’s board may sell some digital assets to repurchase stock, aiming to narrow the discount and restore the stock price to parity with NAV. This approach actively manages the dynamics of premium and discount but inherently involves selling cryptocurrencies during market weakness. These three options highlight the fragile balance between asset preservation and shareholder value. (6) Selling pressure: Motivations and impacts The decision-makers of DATs typically use stock as their main form of compensation. While this aligns their interests with stock performance, it also leads them to favor short-term solutions. Since personal wealth is directly linked to stock prices…