Bitwise chief funding officer Matt Hougan says digital asset treasuries want to begin taking the onerous path in the event that they wish to stand out from the gang; in any other case, buyers are higher off investing in crypto exchange-traded funds as a substitute.
Among the finest methods to discern whether or not a digital asset treasury (DAT) is value is to ask the query, “Are they doing one thing onerous?” Hougan argued in an X submit on Wednesday.
“Shopping for a crypto asset and placing it on a stability sheet at this time is not onerous. It was onerous at one level, but it surely’s not onerous now. If that is all a DAT is doing, you might be higher off proudly owning an ETF. That is true even when the DAT is staking, as ETFs now stake,” he mentioned.
Bitwise has launched a variety of ETFs tied to crypto, together with a Solana (SOL) ETF that provides staking.
Key components to look at for in a DAT
There are just a few methods for DATs to face out, Hougan mentioned, comparable to taking part within the DeFi ecosystem by actions like good loans, and different income-generating methods like writing coated calls in opposition to crypto.
“These aren’t all essentially good concepts, and never everybody will do them nicely. However they aren’t trivial, and if finished nicely, there’s a probability they are going to be rewarded,” he mentioned.
“Against this, DATs that take the lazy strategy of simply shopping for a crypto asset and holding it’s going to commerce at a reduction to the worth of that asset.”
Technique, a crypto treasury value watching
Hougan argues that Michael Saylors’ Bitcoin hoarding firm, Technique is “doing one thing onerous.” Technique is a flagship DAT and by far the most important holder with 641,205 in Bitcoin (BTC), value over $66 billion.
“MicroStrategy already owns $64 billion of Bitcoin in opposition to $8 billion of debt, and it is issuing debt in opposition to that place. It’s onerous to have $56 billion in Bitcoin fairness. Go attempt to elevate $56 billion in fairness capital to purchase Bitcoin in a company construction, debt-free. Not simple,” he mentioned.
“And if in case you have $56 billion in Bitcoin fairness, you are able to do issues like promote convertible debt and most popular shares that allow you to purchase extra Bitcoin. In some market situations, this may will let you commerce at a premium.”
DAT’s inventory beneficial properties are sometimes short-lived
The variety of crypto treasuries has exploded this yr, with an October report from Bitwise monitoring 48 new cases of corporations including Bitcoin to their stability sheets, totaling 207 general, and collectively holding over a million tokens, value over $101 billion.
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Nevertheless, questions are being raised as as to if corporations are pivoting to crypto as a PR stunt to avoid wasting floundering stability sheets and enhance inventory costs. A Wednesday report from CoinGecko found that originally, DATs do get pleasure from a inventory spike inside the first 10 days.
The pumps are sometimes short-lived, although, based on CoinGecko, as a result of the vast majority of DAT shares begin “tanking within the days following their pivot.”
“Ultimately, DATs are simply corporations. Good corporations get rewarded for doing onerous issues nicely over time. Unhealthy corporations that execute poorly or attempt to take the simple path to riches get punished. This will likely be true in DAT-land too,” Hougan concluded.
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