The New Players in the Crypto World: Can the DAT Model Withstand Market Turbulence?

The term Digital Asset Treasury companies, known as DAT or DATCO, has become one of the most discussed topics in the crypto industry this year. These structures offer investors a new way to gain exposure to digital assets — but they also introduce new risks.

A DAT is essentially a publicly traded company that holds cryptocurrencies such as Bitcoin or Ether and allows investors to benefit from their price movements. The goal of a DAT is to outperform the asset it holds.

After several weeks of sharp declines in the crypto market, the DAT model is attracting criticism and questions about whether it could further strain an already weakened market.

What is a DAT?

A Digital Asset Treasury is a company that buys and holds cryptocurrencies directly on its balance sheet. Investors can purchase shares in these companies instead of buying tokens themselves. One of the first and largest DATs is Michael Saylor’s company Strategy, which began buying Bitcoin in 2020 and continues to do so today.

In recent years, the number of such structures has risen sharply. While fewer than 10 companies held Bitcoin in their treasuries in 2021, today that figure is around 190, with another 10–20 firms building exposure to other digital assets, according to DLA Piper. The total value of cryptocurrencies held by DATs has reached nearly $100 billion, The Block reports.

Why do DATs exist?

The model has evolved thanks to the strong movements in the crypto market and the increasingly favorable stance of U.S. regulators toward the industry. DATs give investors exposure to digital assets combined with a regulated structure similar to any public company.

They differ from funds like ETFs, which hold assets passively. DATs aim to generate higher returns through various strategies — such as active management, issuing shares, or conducting additional blockchain-based operations. Analysts at Macquarie emphasize that DATs offer regulatory clarity because they provide crypto exposure in the form of SEC-regulated securities.

They are also suitable for institutional investors who face restrictions on direct token ownership or crypto ETFs, notes Professor Carol Alexander of Sussex University.

How do DAT strategies work?

Performance is measured using the market net asset value (mNAV), which compares the company’s market value to the price of the assets it holds. An mNAV above 1 means investors are paying a premium for a particular DAT.

One key tool is the at-the-market share issuance program. When the share price exceeds the value of the cryptocurrency behind it, the DAT can issue new shares and use the proceeds to buy additional tokens. This creates a kind of “positive cycle” in which NAV increases, the premium grows, and the company can expand its portfolio.

Another approach is staking — a process that allows DATs to earn yield in tokens by locking a portion of their cryptocurrency holdings to support the blockchain network. These revenues can be used for acquisitions, token purchases, or distributions to shareholders. Many ETFs cannot fully use staking due to liquidity requirements.

What happens when the market falls?

When cryptocurrencies decline, the mNAV may drop below 1, meaning the company begins trading at a discount relative to the value of its assets. This puts significant pressure on DATs.

Some firms may hold onto their tokens, viewing the decline as an opportunity for future growth. Others — especially those with debt or financing through bonds and new share issuances — may be forced to sell portions of their holdings.

If the NAV premium disappears, the DAT model becomes strained. Issuing new shares begins to dilute the value of cryptocurrency per share rather than increase it, breaking the positive cycle, according to Macquarie.

At the same time, the large number of DATs and the massive inflow of capital increase the model’s vulnerability. If market liquidity, investor sentiment, or cryptocurrency prices deteriorate, the structure could begin to break down.

Strategy is already taking defensive measures. The company announced a $1.44 billion reserve, funded through a new share issuance, to cover dividends and debt servicing. Analysts believe other DATs may follow this example, underscoring the uncertainty surrounding the model.

Will DATs affect crypto prices?

If mNAV continues to fall and DATs fail to stabilize, they may start selling tokens, creating additional downward pressure on the market. Although they currently hold less than 1% of the total crypto market, their influence could grow.

According to Macquarie, a potential large-scale exit from DATs could weaken an important driver of the crypto industry: the integration of digital assets into the balance sheets of publicly traded companies. This would reduce interest in crypto exposure across capital markets.

A bubble or a temporary correction?

Professor Alexander believes that the current boom in DATs already resembles a bubble driven more by marketing and easy capital than by strong business models. Some DATs are already trading below mNAV, suggesting that the market is anticipating asset sales.

Still, experts emphasize that the model has room to evolve. Investors are likely to start seeking more balanced strategies, less shareholder dilution, and greater diversification. Some DATs may allocate part of their holdings to traditional instruments such as cash or government bonds, which could make them more resilient.

Those able to combine diversification, staking yields, and more secure assets are likely to become sustainable players within the digital asset infrastructure.