Digital asset treasury companies are unlikely to maintain valuations above the value of the crypto they hold, according to Bitwise Chief Investment Officer Matt Hougan, who said Sunday that structural frictions in the DAT model make sustained premiums the exception, not the rule.
Key Takeaways:
- Bitwise CIO Matt Hougan says most digital asset treasuries will trade at a discount.
- Only a few uncertain strategies, like issuing debt, lending tokens or using options, can offset this structural pressure.
- Hougan warns that expenses and operational risks compound over time, making sustained premiums rare even for well-run DATs.
Hougan argued that most DATs face unavoidable downward pressure from illiquidity, operating expenses, and execution risk.
These factors, he said, consistently pull a DAT’s market value below the value of its underlying crypto, while only a small set of uncertain levers can push crypto-per-share higher.
“Most will trade at a discount, and only a few exceptional firms will trade at a premium,” Hougan said, calling DATs a category with a “high hurdle.”
Illiquidity, Expenses and Risk Form the Baseline Discount
Hougan broke the structural discount into three pillars, beginning with illiquidity, which he described as a fundamental drag that exists because DAT investors receive exposure indirectly rather than holding the assets themselves.
“Why pay full price today for bitcoin you’d receive in a year?” he asked, saying that any delay or friction creates an automatic markdown.
He then pointed to expenses, noting that operating costs and executive compensation dilute crypto-per-share over time.
Finally, Hougan emphasized risk, explaining that investors must price in the possibility that a treasury firm “will slip up in some way,” whether through poor execution, mismanagement, or unexpected losses.
Combined, he said, these factors create the baseline discount that DATs must overcome.
Only a small set of strategies can offset that structural drag, Hougan noted. These include issuing debt, lending tokens, selling options, or buying assets at a discount — all of which work only under specific conditions and often introduce new points of failure.
“Expenses and risk compound over time,” he added, arguing that even well-run DATs face increasing difficulty maintaining performance across cycles.
ETFs Now Offer the Cleanest Path to Crypto Exposure
Hougan’s comments come as sentiment shifts toward exchange-traded funds, which many analysts say offer cleaner, simpler exposure to crypto.
Nate Geraci, co-founder of The ETF Institute, called spot ETFs “DAT killers” that ended the era when treasury companies could benefit from regulatory loopholes.
Responding to Geraci, Bloomberg ETF analyst Eric Balchunas said ETFs accomplish the same goal as DATs but “with good tracking,” allowing them to mirror underlying asset performance more efficiently.
As reported, the global crypto sector is bracing for potential turbulence as major index provider MSCI weighs whether to exclude digital asset–heavy companies from its flagship equity benchmarks, a move analysts warn could force billions in passive outflows early next year.
The discussion, which began quietly in October, has gained urgency after MSCI confirmed it is consulting the investment community on whether firms holding more than 50% of their balance sheet in Bitcoin or other cryptocurrencies should remain eligible for inclusion.
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