Welcome to the institutional Crypto Long & Short newsletter. This week:
- ZIGChain’s Abdul Rafay Gadit writes that as venture funding declines, digital asset treasury companies (DATCOs) are reshaping corporate finance by turning balance sheets into engines of active capital, proving that the future of institutional cryptocurrencies lies in productivity, transparency, and on-chain governance, not speculation.
- CoinDesk Indices’ Andy Baehr offers a “Vibe Check,” offering a look back at cryptocurrency rates and a look ahead at signs of strength as the country emerges from the government shutdown.
- In the “Chart of the Week”, we examine Ethereum DEX volumes and the price of the UNI token.
– Alexandra Levis
The Rise of DATCOs: Active Treasuries Are Replacing Venture Capital in Cryptocurrencies
– By Abdul Rafay Gadit, co-founder of ZIGChain
For years, corporate cryptocurrency treasuries were little more than speculative balance sheets. The strategy was simple: buy bitcoins, hold and wait. That passive model, popularized by MicroStrategy, is now being displaced by a new class of participants: Digital Asset Treasury Companies (DATCOs), which behave more like venture capital firms than custodians.
This change occurs because the traditional financing model for cryptocurrencies has stagnated. Venture capital investment fell 59% in the second quarter of 2025 to $1.97 billion, its lowest level since 2020. However, the amount of cryptocurrencies held on corporate balance sheets has never been larger: public companies now hold more than a million bitcoins, about 5% of the supply. What began as a store of value has become a store of productive capital.
DATCOs are showing how this transformation works in practice. Instead of simply owning digital assets, they actively deploy them in staking, validation operations, and ecosystem development. Across Europe and Asia, publicly traded DATCOs are allocating significant portions of their treasuries to blockchain participation, earning on-chain performance while supporting network infrastructure. The move not only diversifies exposure but also generates returns and strengthens the networks that underpin the digital asset economy.
This approach reflects a broader redefinition of corporate finance in the blockchain era. Using programmable assets, DATCOs can automate treasury engagement, transparently distribute returns, and measure risk in real time – functions that once required entire departments in traditional finance. It also creates a new feedback loop between networks and their investors: when Treasuries stake, validate, or provide liquidity, they not only earn returns but also contribute to the resilience and scalability of the ecosystem itself.
The implications extend beyond the balance sheets. By running validators and funding ecosystem growth, DATCOs gain influence and knowledge of emerging protocols, advantages once reserved for venture capital.
Regulators and institutions are starting to take notice. An active treasury model that combines transparent on-chain operations with yield generation could mark a game-changer in the way public companies interact with digital assets. For auditors and compliance teams, the appeal lies in traceability: every transaction, validator reward, and assignment is verifiable on-chain. This visibility provides a framework for regulated participation, structuring a space that was once defined by opacity.
As venture capital funding withdraws, DATCOs are quietly becoming the cryptocurrency industry’s new capital backbone: less speculative, more participatory, and potentially much longer lasting. The era of passive balance sheet exposure is coming to an end. In its place is a model in which capital works alongside code, in which the most successful treasuries will be those that help build the networks they possess.
While we wait
– By Andy Baehr, CFA, head of product and research, CoinDesk Indices
When the permanent Bitcoin bulls recalibrated, we knew the bottom was near, right? On November 5, Alex Thorn of Galaxy published a note raising his year-end price target to $120,000 from $185,000. The next day, Cathie Wood lowered her 2030 goal from $1.5 million to $1.2 million. Bitwise’s Matt Hougan maintained his forecast for a Q4 to Q1 rally, but none that would ring the $200,000 bell he had previously predicted. NB: We are not announcing a fund or making price predictions. However, the prospect of the government reopening (really… it takes so little to get us excited) has prices thawing and our thoughts turning to… what’s next?
We can start with some observations about rates. The Federal Reserve recently carried out its largest liquidity injection since the 2020 pandemic: $125 billion in total, including a record $29.4 billion single-day operation on October 31 through the Standing Repo Facility. Bank reserves had fallen to $2.8 trillion (the lowest in four years) due to QT and exacerbated by the shutdown. SOFR fell, and not without drama. CDOR, our CoinDesk overnight rate, which pulls blockchain information from Aave pools, changed but remained in its local range (USDC rate shown below). Only in the last observation did the divergence appear: SOFR fell more while CDOR rose more. Since CDOR rates (and the Aave variable loan rates on which they are based) are based solely on the utilization of Aave’s lending pools, higher rates generally mean one of two things: 1) lenders are pulling out because better opportunities exist and/or 2) borrowers are arriving quickly, sensing, again, good opportunities. It’s interesting, but completely understandable, to see SOFR go down and CDOR go up at the same time.
CESR, the Composite Ether Staking Rate, is a benchmark for Ethereum validator rewards that we have calculated for over two years. Its stability reflects the maturity of the post-merger, Layer 2 Ethereum ecosystem. However, that stability masks the steady increase in daily transactions on the Ethereum mainnet (stablecoins, tokenized assets) that are at the center of this year’s cryptocurrency support narrative. CESR’s stability also goes beyond the hubbub of lengthening validator output queues, which serve as ETH’s equivalent of “OG bitcoin whale selling!!” alarms.
What these rate observations remind us is that for the next cryptocurrency rally to maintain the quality we saw in Q2 and Q3, the fastest growing blockchains (ETH, SOL, etc.) must lead the way. (Inflows into SOL ETFs on a soft tape were a good sign in this case.) More (and more) crypto ETFs will soon hit the market, delighting traders and token loyalists. In that (exciting, exciting) noise, we’ll look for more signs of assignment to the asset class, fast money chasing slow money.
Chart of the week
This week, we examine Ethereum DEX volumes and the price of the UNI token, in the context of Uniswap’s proposal to activate fee shifting for the protocol. In essence, the protocol seeks to take a portion of LP fees and use that revenue to buy back and burn the UNI token. CoinDesk Research estimates that based on current projections, the protocol is likely to earn $300 million in annualized fees, placing it just behind HYPE and PUMP in terms of token buybacks. UNI/USD price is broadly correlated with Ethereum DEX volumes – the recent divergence provided an interesting opportunity, but it appears to be closing given the rise in UNI price. Uniswap as a proxy bet on Ethereum after this proposal could continue to prevail, but there are concerns about increased competition, as CoinDesk Research covers here.
Hear. Read. Look. Engage.
