VanEck recently reported a significant surge in digital asset treasuries (DATs), reaching an impressive $135 billion by September. This growth is largely driven by strategies that capitalize on the volatility of cryptocurrencies, with investment firm Michael Saylor’s holding significantly contributing to this trend. He currently holds over 640,000 Bitcoin worth around $79 billion in value, surpassing market caps of major corporations like Motorola and US Bancorp. ,
However, the DAT model, which leverages stock volatility for capital raising, presents significant risks. The report notes that Bitcoin’s decreasing volatility over a decade threatens its long-term viability as it heavily relies on ongoing fluctuations to fund asset purchases. Additionally, some DATs are currently trading below their net asset values, potentially triggering them to generate income through option sales rather than share issuance, which could further dampen sector volatility and create a self-limiting cycle.
The DAT market has seen explosive growth with over 200 companies specializing in Bitcoin and Ethereum now operating. Public and private corporate Bitcoin treasuries have also accumulated significant amounts of BTC, amounting to about 6.6% of the circulating supply. Similarly, Ether treasury assets have surged to a remarkable 4.5% of the total ETH supply.
Overall, while DATs are currently enjoying rapid growth, their long-term sustainability remains uncertain due to factors such as Bitcoin’s declining volatility and potential risks associated with the DAT model’s reliance on short-term fluctuations.