After a few hectic weeks in the crypto market, the Digital Asset Treasury (DAT) has regained attention, and not for the reasons they had hoped.
Bitcoin, Ethereum, and the broader market experienced rapid downturns amid macro fears, including potential easing of yen trading if the Bank of Japan raises interest rates, increasing volatility, layered liquidations, and aggressive sell positioning from primary institutions, and you have the perfect recipe for investor panic.
DAT stocks have been particularly hard hit. Companies that once traded at multiples of adjusted net asset value (mNAV) — 3x, 5x, or even 10x in the summer — face a simple fear: as prices fall, government bonds will be forced to dump crypto to service loans, protect stock valuations, or simply maintain liquidity.
James Butterfill, Head of Research at CoinShares, said the situation is fragile but not doomed.
“In the summer of 2025, many DAT traded at 3x, 5x, or even 10x their mNAV, and now all are around 1x or lower. From here, the paths diverge: falling prices will lead to disorderly unwinding through aggressive selling, or companies will maintain balances and benefit from potential price recoveries. We lean towards the latter, especially considering the improved macro backdrop and the possibility of interest rate cuts in December, which would support the broader crypto market.”
If prices continue to fall, shorts may increase their attacks, especially on companies with large reserve digital asset holdings, lack of liquidity, or high correlations.
A reversal in December?
The question now is whether DAT companies face a forced-selling death spiral… or a setting for an explosive short squeeze. Butterfill believes the latter remains highly probable.
“Falling prices will cause disorderly unwinding through aggressive selling, or companies will maintain their balances and benefit from potential price recoveries. We lean towards the latter, especially considering the improved macro backdrop and the possibility of interest rate cuts in December, which would support the broader crypto market.”
The market may be approaching a critical moment. Inflation is cooling, bond markets are stabilizing, and speculation is increasing that central banks, including the Fed, may cut interest rates in December.
Rate cuts will weaken the dollar, alleviate liquidity stress, and may stimulate a strong recovery in digital assets.
That may be all the DAT companies need to survive the current storm.
Now DAT must evolve — or die
Even if recovery arrives, Butterfill reasons that the industry must confront uncomfortable structural flaws.
“The recent pullback in the crypto market has revealed their structural weaknesses. Several factors contributed to the decline, including the lack of strong operating businesses behind financial strategies, a shift toward investments in other blockchain-related equities, and the overall drop in crypto prices.”
Investors are tolerant of:
Dilution of shareholders
Exceptional asset concentration
Companies with large crypto holdings but no real income
Companies using public markets to accumulate tokens rather than create products
He said this behavior has undermined the credibility of the entire sector.
The future DAT model
Butterfill predicts a cleansing cycle, one that filters out momentum-driven companies and rewards those creating real economic value.
“When the bubble bursts, the market is reassessing which companies truly fit the DAT model and which are riding momentum. The future of DAT lies in returning to fundamentals: disciplined financial management, reliable business models, and realistic expectations about the role of digital assets on corporate balance sheets.”
He said that the winner in the next round will look like the DAT originally imagined:
Global companies
Diverse sources of income
Strategically used digital assets, not opportunistic
Long-term balance sheet management, not treasury expansion for speculation
If the market stabilizes or even turns upward, companies holding lines instead of settling accounts may find themselves positioned for a strong recovery. In such an environment, short-term broadly targeted asset managers focusing on DAT stocks can quickly relax, which will increase upward volatility.
Interest rate cuts in December could be a catalyst.
