Digital asset treasury companies are unlikely to maintain valuations above the crypto they hold, according to Bitwise Chief Investment Officer Matt Hougan.
Why structural frictions create persistent discounts
Speaking Sunday, he said structural frictions in the DAT model “make sustained premiums the exception, not the rule,” highlighting the persistent pressure on these firms. Hougan explained that most DATs face inevitable downward forces from illiquidity, operating expenses, and execution risk.
“Most will trade at a discount, and only a few exceptional firms will trade at a premium,” he added, describing DATs as a category with a “high hurdle.”
Illiquidity is a fundamental factor. Investors do not directly own the underlying tokens, and any delay in receiving them reduces perceived value.
As Hougan put it,
“Why pay full price today for bitcoin you’d receive in a year?”
Expenses add another layer of pressure. Operating costs, staff salaries, and executive pay gradually erode crypto-per-share value.
Hougan noted that these costs “dilute crypto-per-share over time,” compounding the discount. Risk completes the trio of downward pressures. Even well-run firms face the chance of mismanagement, execution errors, or unexpected losses.
Investors, Hougan said, must consider that a treasury firm “will slip up in some way.” Combined, these factors form a baseline discount that is difficult for most DATs to overcome.
Only a handful of strategies. such as issuing debt, lending tokens, selling options, or buying assets at a discount, can push valuations higher, but each carries additional risk.
“Expenses and risk compound over time,” Hougan emphasized, meaning even exceptional firms must work hard to sustain a premium across cycles.
Etfs offer a simpler path for investors
Interest is increasingly shifting toward exchange-traded funds, which many analysts view as a cleaner and more efficient way to gain crypto exposure.
Nate Geraci, co-founder of The ETF Institute, described spot ETFs as “DAT killers” that remove the operational drag and regulatory loopholes DATs once exploited.
Spot crypto ETFs = DAT killers…
— Nate Geraci (@NateGeraci) November 23, 2025
Have been saying this for a while.
DATs thrived via regulatory arbitrage.
That game is pretty much over now. pic.twitter.com/iF7udqSHnZ
Bloomberg analyst Eric Balchunas echoed this sentiment, noting that ETFs accomplish the same goal as DATs but “with good tracking,” offering closer alignment with the underlying assets’ performance.
This discussion coincides with broader market uncertainty. MSCI is reviewing whether companies with more than 50% of their balance sheet in Bitcoin or other digital assets should remain in its benchmark indexes.
The situation underscores the challenge for DATs: investors demand exposure to crypto, but operational frictions, regulatory scrutiny, and the rise of ETFs make sustaining long-term premiums increasingly difficult.
Gunel Ismayilova
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