Bitcoin digital asset treasury (DAT) companies have been making headlines in recent weeks, and often for the wrong reasons.
A sharp decline in crypto markets and a more than 40% drop (as of November 27) in the share price of the world’s largest corporate bitcoin holder, Strategy (MSTR), this year, has led some to question the sustainability of these companies.
The strategy’s pronounced underperformance relative to bitcoin (down about 2% this year) in recent months may be due to the looming risk of index inclusion rather than crypto market dynamics, according to Wall Street bank JPMorgan. However, the drop in the share price of MSTR and other bitcoin DATs still raises the question: is bitcoin’s digital asset treasury model broken?
According to Elliot Chun, managing partner of investment bank Architect Partners, the opposite is true.
“This is the most exciting period for BTC DATs yet because, in real time, we are and will see which DATs will be able to successfully maneuver and communicate through this first ‘macro’ price move to the downside,” Chun said in an interview with CoinDesk.
“We are still at a very early stage, as an industry we haven’t even properly categorized the DAT category yet, so it’s impossible to say if the model doesn’t work,” he added.
More than 700% return
Chun divides the bitcoin DAT landscape into four large groups that now play out in real time.
“Pure” DATs that direct almost all corporate resources toward maximizing a bitcoin-denominated outcome, often BTC per share. “Produce” DATs that actually generate bitcoins through operations such as mining. “Hybrid” DATs that treat cryptocurrency as a mainstay but still run non-BTC initiatives, and “stakeholder” DATs that simply hold the digital asset on their balance sheet and leverage it as a capital markets tool.
As these categories experiment publicly, failures are inevitable, but according to Chun, that’s standard for any emerging corporate or capital markets model.
What all bitcoin DATs must ultimately solve, Chun notes, is revenue: how to generate yield or cash flow, whether denominated in BTC or otherwise. And not everyone will make it.
He expects that within five years, half of today’s hybrid, production and proprietary DATs will disappear due to failures, delisting, mergers or acquisitions.
About 35% will survive without outperforming, 10% will outperform major market indexes like the S&P 500, and the top 5% could challenge the decade-long trajectory of the Magnificent Seven, with a return of more than 700% between 2025 and 2034, Chun said.
Can these companies withstand a real recession? It depends on how you define “serious.” If the recent pullback counts, Chun expects most DATs to make it. The real test will be deeper macroeconomic stress, where operational clarity, treasury discipline and a credible plan will separate the survivors from the targets.
$1 million bitcoins
So what’s next for this industry? Just like any other industry that grows at breakneck speed during a bull run and begins to crumble during a recession, it’s all about consolidation.
Companies that combine TradFi discipline with a native understanding of bitcoin will craft messages that resonate with investors and position themselves to raise and deploy capital effectively. And those that can’t will be acquired, often by other DATs, Chun said.
In the long term, expect top-performing companies to become acquisition targets for the world’s largest public companies as the price of bitcoin moves toward $1 million and corporate treasuries increasingly view BTC as a strategic, rather than speculative, asset.
Read more: Bitcoin’s trillion-dollar crash exposes fragile market structure, says Deutsche Bank
