DAT's stock price halved: Why did the "paper gold" of digital asset treasuries fail?

The latest data released by Bloomberg shows that this year, the median stock price of Digital Asset Treasury (DAT) companies listed in the US and Canada has plummeted by a staggering 43%.

Digital Asset Treasury companies typically raise funds by issuing stocks or bonds and then concentrate investments in Bitcoin, Ethereum, or other crypto tokens. This model was once highly sought after by the market and regarded as a “shortcut” for traditional investors to indirectly hold cryptocurrencies.

01 Crypto Market Winter

The overall crypto market has been under pressure this year, but the performance of DAT companies is far worse than that of the underlying assets. According to data compiled by Bloomberg, the median stock price of these companies has dropped by 43%.

In contrast, Bitcoin has fallen by about 6% since the beginning of the year. This huge performance gap reveals the inherent fragility of the DAT business model.

Some companies have experienced even more alarming declines. For example, Greenlane Holdings’ stock price has plunged over 99% this year, even though its balance sheet still holds approximately $48 million worth of BERA crypto tokens.

02 Case Studies

Once high-profile cases have now become cautionary tales in the market. Take Ethereum treasury company SharpLink Gaming as an example. The company previously announced it was abandoning its original gaming business to instead raise large amounts of capital by issuing stock to purchase Ethereum.

This aggressive pivot sparked market frenzy, with the stock price soaring more than 2,600% in a matter of days. Now, its stock price has fallen 86% from its peak, and the company’s market cap is even lower than the value of its digital token holdings.

Another high-profile company, Alt5 Sigma, rose to fame with the support of two of former US President Trump’s sons. However, its stock price has also dropped by about 86% since its June peak.

03 Multiple Dilemmas

DAT companies are facing multiple challenges. Simply holding tokens does not generate revenue, yet these companies must bear the burden of debt interest and dividends. When cryptocurrency prices fall, this structural contradiction is sharply magnified.

Many DAT companies took on significant debt to acquire cryptocurrencies, and financial leverage amplifies the impact of market volatility. Compared to directly investing in cryptocurrencies, investing in DAT company stocks actually adds extra financial risk.

In Bloomberg’s analysis, the worst performers are often those public companies that avoided Bitcoin and instead invested in smaller, more volatile tokens. For example, companies focusing on holding Ethereum or niche tokens have seen far greater declines than those primarily holding Bitcoin.

04 Investors Shift

With the continued poor performance of DAT company stocks, more investors are reconsidering direct ways to hold cryptocurrencies. The maturity of custodial services and increased regulatory transparency now provide a safer environment for directly holding digital assets.

On leading global trading platforms like Gate, investors can directly trade mainstream crypto assets such as Bitcoin and Ethereum, as well as access carefully selected potential tokens, without bearing the extra operational risk and financial leverage of DAT companies.

Direct asset ownership means investors have full control over their crypto assets, without relying on third-party corporate financial management and operational decisions. This autonomy is especially important in volatile markets.

It is worth noting that Bloomberg’s analysis points out that even among the relatively better-performing DAT companies, most investors who bought near the peak have incurred losses, and 70% of company stock prices are likely to end the year lower than at the start.

Outlook

Traditional perceptions of the crypto market are being overturned. On the Gate exchange’s market page, Bitcoin prices have stabilized around $90,900, while once-popular DAT company stocks have found themselves in the predicament of “market cap below holding value.”

As the market becomes more aware of DAT companies’ structural issues, more investors are returning to basics, directly allocating and managing their crypto assets on platforms like Gate, bypassing the risks and costs of intermediaries.

When market frenzy subsides, DAT company stocks, once seen as “paper gold,” reveal their fragility, while the value-storing nature of crypto assets themselves demonstrates more lasting resilience amid market volatility.