CoinShares: The Digital Asset Treasury "bubble has basically burst," the next generation of DAT cannot blindly issue debt to hoard tokens

James Butterfill, Head of Research at digital asset management firm CoinShares, stated that the speculative bubble of Digital Asset Treasuries (DAT) has indeed burst from many perspectives.

(Previous context: Texas spent $5 million to buy BlackRock’s IBIT: After DAT fizzled out, can SBR reignite the Bitcoin bull market?) (Background supplement: Wall Street resists DAT? MSCI considers excluding “crypto treasury companies” like MicroStrategy from index components.)

On December 5, James Butterfill, Head of Research at CoinShares, published a lengthy blog post, bluntly pointing out that the speculative bubble of Digital Asset Treasuries (DAT)—publicly traded companies that hoard Bitcoin, Ethereum, and other crypto assets on their balance sheets, allowing investors to indirectly hold crypto through stocks—“has indeed burst from many perspectives.”

From Star Concept to Bubble Burst: The 2025 Summer Frenzy Is Over

Butterfill reviewed that in the summer of 2025, the market value of many DAT companies once soared to three, five, or even ten times their net asset value (mNAV), with the market treating them as “leveraged Bitcoin ETFs.” Now, these companies’ mNAVs have almost all returned to 1x or even lower, with premiums completely vanishing. He emphasized that this isn’t simply a price correction, but rather a collective awakening to the “stock issuance to hoard coins without real business operations” model.

Butterfill went on to point out that DATs were initially designed to hedge against currency devaluation with Bitcoin, with MicroStrategy (MSTR) starting its Bitcoin treasury strategy in August 2020 as a classic example. However, many companies later abandoned their core business, issuing stock solely to buy more coins, even using debt, preferred stock, and ATM mechanisms for constant leverage, turning it into a “leveraged bet that Bitcoin prices will always rise”—a complete departure from the original intent.

The Biggest Fear Now Is Not Further Price Drops, but “Forced Coin Sales”

The article further analyzes that the main DAT companies have not yet sold coins on a large scale this year, as they’re still trying to avoid triggering a selling spiral. However, if mNAV stays below 1x for an extended period, three outcomes may occur:

• Management refuses to shrink reserves, choosing to tough it out and wait for a rebound.
• A few companies take the opposite approach, selling coins to buy back shares, increasing per-share coin holdings.
• They become acquisition targets, with better-capitalized firms buying their Bitcoin at low prices.

However, Butterfill believes the first scenario is most likely, especially since the US Federal Reserve is likely to continue rate cuts in December and the macro environment is improving, so the crypto market may still rebound.

Next-Generation DATs Will Reshuffle: Four New Categories Emerging

Butterfill also predicts that investors will soon divide the market into four categories:

• Speculative DATs: Core business is optional, pure coin-holding to bet on price.
• Treasury-Driven DATs: Genuinely use Bitcoin as a forex management tool.
• Token Investment Companies: Hold diversified tokens like closed-end funds.
• Strategic Enterprises: Companies like Tesla or Block Inc. that hold coins but don’t label themselves as DATs.

Butterfill quipped, “Truly high-quality companies are ironically excluded from the DAT label.”

Conclusion: Bubble Burst, Concept Lives On

Butterfill concluded that the bursting of the DAT bubble doesn’t mean the concept is dead, but that it needs to return to fundamentals. Future winners must have three qualities: real business operations, disciplined asset management, and realistic expectations. Otherwise, using the stock market as an ATM to endlessly buy coins will be eliminated by the market.

Related Reports

• Bitwise CIO: My View on the Current State of DAT Companies
• Deconstructing the Keys to DAT Success: Building Deep Analysis Beyond mNAV
• Bitwise warns: The future of Digital Asset Treasury (DAT) companies is tough—investors may shift entirely to crypto ETFs

(This article “CoinShares: Digital Asset Treasuries ‘Bubble Has Basically Burst,’ Next-Gen DATs Can’t Mindlessly Issue Debt to Hoard Coins” was originally published on BlockTempo, the most influential blockchain news media.)