The corporate strategy of stockpiling cryptocurrency on balance sheets is losing the financial advantage that made it attractive, as many digital asset treasury firms now see their shares trade below the value of the crypto they hold, according to analysis from DWF Labs.
A Model Under Pressure
Digital asset treasury companies, or DATs, rose to prominence by raising capital through equity sales and using the proceeds to accumulate cryptocurrencies like Bitcoin. The model thrived when these firms traded at a premium to their net asset value, allowing them to issue new shares at inflated prices and buy more crypto without diluting existing holders.
That dynamic has now reversed for much of the sector. With the majority of DATs trading below the market value of their underlying holdings, the mechanism that once fueled balance sheet expansion has broken down. When a stock trades below NAV, raising fresh equity becomes dilutive rather than accretive, undercutting the entire rationale behind the strategy.
When the premium disappears, the treasury playbook stops printing gains and starts destroying them.
Retreat and Reassessment
The waning appeal of the approach is already prompting some companies to change course. Sequans Communications, for example, has moved to unwind part of its Bitcoin exposure, signaling that the buy-and-hold treasury thesis may no longer justify the risks for every firm that embraced it.
DWF Labs' assessment points to a broader recalibration across the industry, where firms that once raced to load up on digital assets are being forced to reckon with softer market sentiment and shrinking valuation premiums.
- Most DATs currently trade below their net asset value.
- Premium-driven equity raises have become far less viable.
- Some firms, including Sequans, are trimming their crypto positions.
For companies still committed to the model, the shift raises hard questions about sustainability. Without a persistent premium to their crypto holdings, treasury firms lose a key competitive edge and may need to lean on operating fundamentals rather than financial engineering to keep investors on board.