Introduction
Digital Asset Treasury companies are pivoting from Bitcoin and Ethereum toward lesser-known altcoins in search of higher returns as Bitcoin’s value declines. This strategic shift sees companies exploring emerging tokens with specialized features, but analysts warn the move carries significant liquidity and market risks following substantial investor losses.
Key Points
- At least 200 DAT companies exist with $150B market cap, triple last year's figure
- Retail investors lost approximately $17 billion on Bitcoin treasury investments according to 10x Research
- Companies like Greenlane and OceanPal are acquiring altcoins like BERA and NEAR to leverage AI capabilities and seek higher returns
The Digital Asset Treasury Boom and Pivot
The Digital Asset Treasury (DAT) sector has experienced explosive growth, with at least 200 companies now operating with a combined market capitalization of approximately $150 billion as of September—a more than threefold increase from the previous year. These firms, predominantly focused on Bitcoin (BTC) and Ethereum (ETH), emerged amid favorable pro-crypto regulations worldwide. However, as Bitcoin’s value declines, companies are increasingly turning to new tokens in hopes of achieving greater returns, marking a significant shift in investment strategy.
Recent weeks have seen prominent DAT companies announcing moves beyond the crypto giants. Greenlane, OceanPal, and Tharimmune have revealed plans to acquire tokens like Berachain (BERA), Near protocol (NEAR), and Canton Coin (CC), respectively. Peter Chung, head of research at crypto-focused Presto Research, noted that while the initial hype surrounding DATs has diminished, potential for resurgence remains. An OceanPal representative specifically cited their NEAR token acquisition as intended to leverage the asset’s integrated artificial intelligence capabilities.
Retail Investor Losses and Market Pressures
The strategic shift comes against a backdrop of significant investor losses. Earlier this year, many digital asset treasury companies traded at a premium to their crypto holdings as investors believed these firms could leverage credit to acquire more tokens. However, with Bitcoin’s recent struggles and an influx of Strategy (formerly MicroStrategy) imitators, the landscape has deteriorated dramatically.
According to estimates from Singapore-based 10x Research, retail investors—significant buyers of high-profile Bitcoin treasury companies—reportedly lost around $17 billion on these trades. Reuters indicates that at least 15 Bitcoin treasury companies were trading below the net asset value of their tokens as of last Friday. The pressure extends beyond Bitcoin-focused firms, with ETHZilla and Forward Industries recently approving share repurchases—a strategy typically employed to support declining share prices.
Analyst Warnings and Heightened Risks
Despite the potential for higher gains, analysts are sounding alarms about the risks associated with DATs’ pivot to alternative cryptocurrencies. Cristiano Ventricelli, vice president and senior analyst of digital assets at Moody’s Ratings, cautioned that expanding into ‘exotic’ and less liquid cryptocurrencies could significantly heighten risk. According to Ventricelli, when market conditions worsen, companies that invest in these assets face greater pressure on their equity.
Michael O’Rourke, chief market strategist at JonesTrading, expressed similar concerns, noting that most digital asset treasury companies may ultimately trade at a discount to their digital assets. These warnings highlight the precarious position of DATs as they navigate between seeking higher returns in alternative tokens like BERA, NEAR, and CC while managing liquidity risks and market volatility that have already cost investors billions.
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