Why Most DATs Remain in Discount Zones
Date: 2025-11-25 Author: Henry Casey Categories: BUSINESS
Bitwise Chief Investment Officer Matt Hougan addressed common misconceptions surrounding digital treasury companies that hold cryptocurrency assets and issue securities valued using the mNAV metric. He noted that market participants often draw incorrect conclusions about why the shares of such companies may trade either above or below the value of their crypto portfolio.
According to Hougan, many discuss premiums and discounts without considering the fundamental operating conditions of DATs. If a company were to close its doors the very next day, its mNAV would be close to one: there is simply no time horizon for risks or costs to manifest. However, in reality, DATs operate for much longer, and it is during these timeframes that factors influencing valuations begin to emerge.
The expert emphasized that, for a combination of reasons, DAT should often trade at a discount. He believes illiquidity is a key factor: investors are unwilling to pay full price for assets they can only obtain over a long period. Hougan believes a reasonable discount is around 10%.
The second factor is operating expenses. DAT's capital is spent on management, employee compensation, and administrative costs. The higher these expenses, the more they reduce the final value of the asset for investors. Furthermore, there are risks: the company could face bankruptcy or structural problems, which further reduces market participants' willingness to pay a premium.
Hougan specifically noted that there are virtually no reasons for a premium. In the US, he said, there is only one scenario in which DAT could trade above mNAV: by providing shareholders with a larger volume of crypto assets per share. This could be achieved in several ways. These include issuing debt securities, which is effective when the crypto market is growing, crypto lending, income from derivatives transactions, or acquiring assets at a discount—for example, frozen funds or other DATs whose shares are trading even cheaper.
However, such opportunities are not available to everyone. Hougan emphasizes that larger DATs have an advantage: they are able to raise more capital, issue debt instruments, develop lending lines, and thereby support sustainable valuation growth. Smaller companies, on the other hand, face difficulties maintaining liquidity and increasing the volume of crypto assets per share.
Ultimately, the expert concludes that discounts for DATs are normal and understandable, while premiums remain the exception. Most such companies, he argues, will continue to trade below the value of their assets, and their prospects will largely depend on their scale and ability to attract financing.
