Author: Frank, PANews

In the midst of the crypto market frenzy, "Digital Asset Treasury Companies" (DAT companies) acted as an "unlimited ammunition depot," absorbing massive amounts of funds from traditional markets through innovative financial instruments, continuously "infusing" the crypto ecosystem with capital. However, as the market fervor subsided and recent performance remained sluggish, these former "buyers" are facing a severe test. Can they continue to support the market? Or will their inherent structural risks transform them from "blood transfusion pumps" into "hidden bombs," becoming "accelerators" that amplify market declines?

DAT's stock price plummeted, and asset purchases dropped by 95%.

According to BBX data, there are currently 248 publicly listed crypto treasury companies, of which 187 hold Bitcoin. 42 hold Ethereum, and 20 hold SOL. As of November 6th, many DAT companies have a market capitalization far below their NAV (Net Asset Value). Specifically, 15 companies holding BTC have an mNAV below 1, and 5 holding ETH have an mNAV below 1, totaling 37 companies with an mNAV below 1, representing approximately 14.9% (mNAV = Circulating Market Capitalization / Value of Cryptocurrencies). This means that about 85% of crypto treasury companies have a market capitalization greater than the value of their crypto asset holdings.

From a market capitalization perspective, companies holding BTC are the largest, with a total of $417.8 billion in assets. Therefore, the performance of these DAT companies is more representative. PANews compiled the performance of 34 non-mining publicly listed companies listed on SoSovalue that hold more than 100 BTC over the past three months.

Overall, these listed companies experienced an average price change of -24.51% over the past three months, with only five companies seeing their share prices rise. The rest all experienced declines. Next Technology suffered the largest drop, with a decline exceeding 95% over three months. During this period, these companies also experienced some significant gains, with an average maximum increase of 49%, and six companies seeing maximum increases exceeding 100%.

However, the subsequent declines were equally dramatic, with these companies experiencing an average correction of 51.8%.

In contrast, the price of BTC fell by 14% during the same period, with the largest pullback reaching 21%. Clearly, these crypto treasury companies exhibited greater volatility, with both rises and falls exceeding those of BTC.

Overall, with the recent weakness in the crypto market, these crypto treasury companies have generally been even more sluggish. Take Strategy, the absolute leader, as an example: in July of this year, Strategy's stock price reached a high of $455, but as of November 4th, its stock price had fallen to a low of $246, an overall drop of 45.9%. And this trend continues, with no signs of a rebound in the near future.

The stock price decline also reflects the market's pessimism towards DAT-related companies. From a Bitcoin investment perspective, a large number of companies have a cost basis for BTC higher than the current spot price. For example, as of November 6th, the current price of BTC was approximately $102,900. There were 23 companies with a cost basis exceeding this price. However, since most of these companies are relatively new DAT companies, their overall proportion is not high. Strategy, with the highest proportion, has an average cost basis of $74,000, still indicating significant profit potential.

Furthermore, as prices declined, the pace of buying by these crypto treasury companies gradually slowed. According to data from Blockworks, total crypto asset purchases in the week of October 27 to November 2 were approximately $342 million, a 95% decrease compared to the peak week of $7.39 billion. ETF data during the same period showed a similar trend.

Therefore, the traditional financial market's ability to provide funds to the crypto market is more like adding icing on the cake than providing help in times of need.

Who will "dump" the market? Potential liquidation risks of three DAT treasury models.

A common concern in the market is that DAT companies will engage in "panic selling" due to "losses." This question is actually difficult to answer with a single standard answer, as these DAT companies vary significantly in their financing methods, debt structures, and asset management strategies. However, PANews has selected three relatively typical models for analysis to address whether these DAT companies could become a potential source of dumping during a market downturn.

First, the most typical example is Strategy (MSTR), whose strategy is to "accumulate" Bitcoin indefinitely.

Over the past five years, Strategy has borrowed a total of $7.27 billion through the issuance of various "convertible notes." These notes typically have zero or extremely low coupon rates, making their financing appear almost "free." In this process, investors accept zero interest because they are not betting on the company's profits, but rather on the "stock call option" embedded in the notes—the right to convert the bonds into high-priced MSTR stock in the future. Therefore, essentially, Strategy's convertible note issuance is more like issuing an option product; for investors, if Bitcoin rises, they will convert these notes into company stock to enjoy the benefits.

However, it's worth noting that when the price of Bitcoin continues to fall, investors will not choose to "convert" to stocks. Instead, they will exercise the "put option" hidden in the bond terms—demanding that Strategy repay 100% of the cash principal upon maturity. And in the event of insolvency, Strategy's only remaining option will ultimately be to sell Bitcoin.

However, these bonds mostly mature between 2028 and 2030. If the price of Bitcoin is significantly higher than the current price during that period, these bonds will likely be converted into stocks. Furthermore, Strategy has designed a mechanism where, if the price rises and the bonds are not converted into stocks, the company has the right to redeem them at face value (plus interest). This is also a strategy to mitigate potential price declines.

Overall, Strategy or companies with similar mechanisms are unlikely to sell off their crypto assets in the short term.

Of course, Strategy is a well-known publicly traded company in the crypto market, and its influence allows it to maintain strong fundraising capabilities even under extremely demanding conditions. Other newer DAT companies, however, have to resort to different strategies.

Take Sonnet BioTherapeutics as an example. This original biopharmaceutical company was acquired through a "reverse takeover" led by crypto-native VCs such as Paradigm, Pantera, and Galaxy Digital. It adopted a method similar to a "backdoor listing".

These VCs used a dying biotech company (SONN) as a shell, injecting $888 million worth of HYPE tokens and cash into it, turning it into a Nasdaq-listed pure HYPE treasury (renamed Hyperliquid Strategies Inc., HSI). The acquisition is still ongoing.

The potential risk for this company lies in the fact that the acquisition was announced on July 14, 2025. On the same day, Bitcoin hit an all-time high of $123,000, while the HYPE token also hit an all-time high of $49.75 (later rising to $59). The company was born at the height of market frenzy, making its balance sheet extremely vulnerable to market corrections.

As of November 5th, HYPE's price had fallen to $39.70. As a Nasdaq-listed company, the new FASB rules require it to report unrealized losses from the price decline in its quarterly financial statements. These massive book losses could scare away traditional investors, causing the stock price to collapse and cutting off its financing channels.

This could trigger a chain reaction. When the market capitalization of its stock is far below the net asset value it holds, aggressive hedge funds may find arbitrage opportunities: they can buy HSI stock cheaply on the open market, then use shareholder rights to launch a proxy war, forcing the company to liquidate its entire HYPE treasury and distribute the proceeds (above the net asset value of the stock) to shareholders.

From this perspective, companies that go public through backdoor listings, coupled with the relatively unstable nature of crypto assets, may face a sell-off.

Another type of company explicitly states in its operating rules that selling off assets will be part of the game. Take TONX (formerly VERB Technology) as an example. This publicly traded company raised a massive $558 million PIPE (private equity) round, backed by institutions such as Kingsway Capital, Pantera, and Kraken, and was restructured into TON Treasury. Its design included the following rules:

If the TONX share price is higher than the NAV (premium), the company will issue new shares to purchase more TON.

If TONX's share price falls below its NAV (discount), the company has authorized a share buyback program of up to $250 million.

Currently, the company's mNAV is 0.495, meaning it's trading at a discount. If the stock buyback program is activated, its current $67 million in cash will be insufficient to support the $250 million buyback, directly resulting in the sale of TON assets. Taking this step will create a vicious cycle: a decline in TON's price could negatively impact TONX's share price. Even a buyback might not be enough to restore market confidence.

In conclusion, there seems to be no flywheel that goes up forever in this world. DAT, which seems to have unlimited ammunition, also has many hidden dangers behind its mechanism. Moreover, many public chain foundations seem to be using similar models to amplify leverage.

A “bull market accelerator” can also be a potential driver of a “bear market downturn.”

So, when the market lacks confidence, we have to ask ourselves: Is the rise of DAT companies just a short-lived frenzy at the end of a bull market, or is it a source of funding with long-term potential for the crypto industry?

From a short-term market perspective, even with a slowdown in entry, these DAT companies remain relatively stable fresh blood in the crypto market, and they are unlikely to easily sell their crypto assets except in extreme circumstances. For some altcoins, DAT companies' holdings already exceed 5% or more of the total market capitalization.

These companies have collectively injected hundreds of billions of dollars into the crypto ecosystem from traditional capital markets. They represent one of the largest and most concentrated groups of buyers in the market.

However, due to the varying motivations and regulatory structures of these companies, DAT firms are also a somewhat unstable source of funding. In a bull market, they act as perfect "bull market accelerators." Leveraging the leverage and regulatory advantages of traditional financial markets, they continuously attract funds, effectively driving market growth.

In a bear market, these companies may be forced into liquidation due to their debt covenants, articles of incorporation, and shareholder demands. Although the probability of such an event is small, it inevitably becomes an accelerator of a "death spiral" that amplifies systemic risk, should it occur.

Of course, even with the current strong market pessimism, the objective reality is that a "black swan" event has not yet occurred. As for the DAT financial strategy's business model, everything is still in its early stages, and the final outcome still needs to be tested by the market and time. Perhaps, after this market correction, DAT companies will become the new driving force for the next round of growth.

Strategy, the Bitcoin treasury firm, will remain listed on the Nasdaq 100 index.

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