Original Title: When DAT Wrapper Cracks
Author: Prathik Desai
Compiled and Edited by: BitpushNews
Over a year ago, becoming a digital asset treasury seemed like an easy decision for many companies seeking to boost their stock prices.
Some Microsoft shareholders rallied, urging the board to evaluate the benefits of incorporating some Bitcoin into its balance sheet. They even mentioned Strategy (formerly MicroStrategy), the largest publicly traded Bitcoin DAT.
At that time, there was a financial flywheel attracting everyone to follow suit.
Buy large amounts of BTC/ETH/SOL. Watch the stock price exceed the value of these assets. Issue more shares at a premium. Use the proceeds to buy more cryptocurrency. Rinse and repeat. This financial flywheel supporting publicly traded stocks seemed nearly perfect, enough to tempt investors. They paid over two dollars for just one dollar's worth of indirect Bitcoin exposure. Those were crazy times.
But time tests the best strategies and flywheels.
Today, as the total crypto market capitalization has evaporated over 45% in the past four months, the market cap to net asset value ratio for most of these wrapper companies has fallen below 1. This indicates the market values these DAT companies below the value of their crypto treasuries. This changes how the financial flywheel operates.
Because a DAT is not just a wrapper for assets. In most cases, it is a company with operational overhead, financing costs, legal and operational expenses. In the era of mNAV premiums, DATs funded their cryptocurrency purchases and operational costs by selling more shares or raising more debt. But in the era of mNAV discounts, this flywheel breaks down.
In today's analysis, I will show you what sustained mNAV discounts mean for DATs and whether they can survive the crypto bear market.
Between 2024 and 2025, over 30 companies rushed to transform into DATs. They built treasuries around blue-chip coins like Bitcoin, ETH, and SOL, and even meme coins.
At their peak on October 7, 2025, DATs held cryptocurrencies worth $118 billion, with a total market capitalization of over $160 billion for these companies. Today, DATs hold cryptocurrencies worth $68 billion, while their discounted total market cap is just over $50 billion.
All their fates hinge on one thing: their ability to wrap assets and weave a story that makes the wrapper's value exceed the asset's value. This difference becomes the premium.
The premium itself became the product. If the stock traded at 1.5 times mNAV, a DAT could sell $1 worth of stock, then buy $1.5 worth of crypto asset exposure, and describe the transaction as "value-accretive." Investors were willing to pay the premium because they believed the DAT could continue selling shares at a premium and use the proceeds to accumulate more cryptocurrency, thereby increasing the crypto assets per share over time.
@Decentralised.Co
The problem is, the premium doesn't last forever. Once the market stops paying extra for this wrapper, the "sell stock to buy more crypto" flywheel gets stuck.
When the stock no longer trades at 1.5 times its asset value, each new share issued buys less cryptocurrency. The premium is no longer a tailwind but becomes a discount.
Over the past year, the stock prices of leading BTC, ETH, and SOL DATs have fallen more than the cryptocurrencies themselves.
Once the premium of the stock relative to the underlying asset disappears, investors naturally ask why they shouldn't just buy the cryptocurrency directly elsewhere, such as on decentralized or centralized exchanges, or through exchange-traded funds, at a cheaper price.
Matt Levine from Bloomberg raised an important question: If DATs are trading below net asset value, let alone at a premium, why don't investors force the company to liquidate its crypto treasury or buy back shares?
Many DATs, including the sector leader Strategy, have tried to convince investors that they will hold the cryptocurrency through the bear market cycle, waiting for the return of the premium era. But I see a more critical issue. If DATs cannot raise additional funds for the foreseeable long term, where do they get the money to sustain operations? These DATs have bills and salaries to pay.
Strategy is an exception for two reasons.
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It reportedly holds $2.25 billion in reserves, enough to cover its dividend and interest obligations for about 2.5 years. This is important because Strategy no longer relies solely on zero-coupon convertible bonds to raise funds. It has also issued preferred instruments that require paying substantial dividends.
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It also has an operating business, however small, that still generates recurring revenue. In Q4 2025, Strategy reported total revenue of $123 million and gross profit of $81 million. Although Strategy's net profit can fluctuate significantly due to mark-to-market changes in crypto asset prices each quarter, its business intelligence division is its only tangible source of cash flow.
But this still doesn't make Strategy's strategy foolproof. The market can still punish its stock—as has happened over the past year—and weaken Strategy's ability to continue raising funds at low cost.
While Strategy might weather the crypto bear market, the newer DATs that lack sufficient reserves or operating businesses to cover their inevitable expenses will feel the pressure.
This distinction is even more pronounced among ETH DATs.
The largest Ethereum-based DAT—BitMine Immersion, has a marginal operating business supporting its ETH treasury. In the quarter ended November 30, 2025, BMNR reported total revenue of $2.293 million, including consulting, leasing, and staking revenue.
Its balance sheet shows the company holds digital assets worth $10.56 billion and cash equivalents of $887.7 million. BMNR's operations resulted in a net negative cash flow of $228 million. All its cash needs were met by issuing new shares.
Last year, as BMNR's stock traded at an mNAV premium for most of the year, raising funds was relatively easy. But over the past six months, its mNAV has dropped from 1.5 to about 1.
So what happens when the stock no longer trades at a premium? Issuing more shares at a discount could lower the ETH price per share, making it less attractive to investors than buying ETH directly from the market.
This explains why BitMine said last month it would invest $200 million to acquire shares in Beast Industries, a private company owned by YouTube creator Jimmy "MrBeast" Donaldson. The company said it would "explore ways to collaborate on DeFi initiatives."
ETH and SOL DATs might also argue that staking income—something BTC DATs cannot boast—could help them sustain operations during a market crash. But this still doesn't solve the problem of meeting the company's cash flow obligations.
Even with staking rewards (accrued in cryptocurrencies like ETH or SOL), as long as these rewards are not converted into fiat currency, DATs cannot use them to pay salaries, audit fees, listing costs, and interest. Companies must either have sufficient fiat revenue or sell or re-mortgage their treasury assets to meet cash needs.
This is evident in the largest SOL-holding DAT—Forward Industries.
FWDI reported a net loss of $586 million in Q4 2025, despite earning $17.381 million in staking and related income.
Management clearly stated that its "existing cash balance and working capital are sufficient to meet our liquidity needs for at least until February 2027."
FWDI also disclosed an active capital raising strategy, including at-the-market stock offerings, buybacks, and a tokenization experiment. However, if the mNAV premium does not exist long-term, all these attempts may fail to manage its wrapper price.
The Path Forward
At the core of last year's DAT frenzy was the speed of asset accumulation and the ability to raise funds by issuing shares at a premium. As long as the wrapper could trade at a premium, DATs could continue converting expensive equity into more crypto assets per share and call it "beta." Investors also pretended the only risk was the asset price itself.
But the premium doesn't last forever. Crypto cycles can turn it into a discount. I wrote about this issue shortly after the 10/10 liquidation event last year, when I first observed the premium decline.
However, this bear market will prompt DATs to assess whether they should continue to exist once their wrapper no longer trades at a premium.
One way to resolve this dilemma is for companies to enhance their operational efficiency, supplementing their DAT strategy with a business that generates positive cash flow or surplus reserves. This is because when the DAT story can no longer attract investors in a bear market, a regular corporate story will determine its survival.
If you've read the article "Strategy & Marathon: Belief and Power," you'll recall why Strategy has remained standing through multiple crypto cycles. However, the new batch of companies, including BitMine, Forward Industries, SharpLink, and Upexi, cannot rely on the same strength.
Their current attempts with staking yields and weak operating businesses might crumble under market pressure unless they consider other options to cover real-world obligations.
We observed this with ETHZilla, an Ethereum treasury company that sold about $115 million worth of ETH holdings last month and bought two jet engines. The DAT then leased the engines to a major airline and hired Aero Engine Solutions to manage them for a monthly fee.
Going forward, people will evaluate not only the digital asset accumulation strategy but also the conditions under which it can survive. In the ongoing DAT cycle, only companies that can manage dilution, liabilities, fixed obligations, and trading liquidity will weather the market downturn.
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