In a recent analysis, Matt Hougan, Chief Investment Officer at Bitwise, delved into the valuation complexities surrounding digital asset treasury companies (DATs). He emphasized that the common methods employed to assess these firms often overlook crucial factors influencing their market pricing.
Hougan suggested that the primary consideration when valuing a DAT should be its worth if it were to face a predetermined liquidation period. He illustrated this by stating that a DAT focused on Bitcoin would trade at its net asset value (NAV) if it announced an immediate shutdown and distribution of its holdings. However, extending the liquidation timeline to a year could lead to valuations fluctuating above or below the underlying asset value.
Three significant factors contribute to a discount on the market NAV: illiquidity, expenses, and risk. Illiquidity refers to the reduced price investors are willing to pay today for Bitcoin that would only be accessible in the future, with Hougan estimating potential discounts of 5-10%. Expenses that diminish investor value also play a critical role; for instance, a DAT holding assets worth $100 per share but incurring $10 per share annually in executive compensation would justify a similar 10% discount.
Risk, defined as the likelihood of operational failures or errors, must also be factored into the pricing mechanism. Conversely, Hougan noted that DATs could command a premium if they are actively increasing their crypto-per-share holdings. In the U.S. market, this is generally the sole rationale for such premiums.
To enhance their asset base, Hougan identified four primary strategies that DATs might employ: issuing USD-denominated debt to acquire crypto, lending out crypto for interest income, utilizing derivatives like call options for additional revenue, and acquiring crypto at discounted rates. This last strategy may involve purchasing locked assets from foundations requiring liquidity or acquiring other DATs trading below their asset value.
He remarked on the inherent “high hurdle” for most DATs, where discount factors are relatively predictable, while those enabling a premium remain uncertain. This scenario leads many firms to trade at a discount, with only a select few achieving premium valuations.
For example, when considering a Bitcoin DAT set to liquidate in 12 months, fair value can be approximated by calculating its expenses and applying a risk discount, while also factoring in any anticipated increases in Bitcoin per share. Although DATs do not have fixed lifespans, the model remains relevant as expenses and risks accumulate over time. Companies capable of consistently enhancing their crypto-per-share metrics may see their valuations soar.
Moreover, larger DATs possess structural advantages that smaller firms lack, such as better access to debt markets, larger crypto pools for lending purposes, and greater opportunities for mergers and acquisitions.
While the performance of DATs has been closely aligned over the past six months, Hougan predicts that divergences will become more pronounced. A limited number of firms will likely perform well enough to trade at a premium, while a majority will continue to trade at a discount. According to a recent report from CoinGecko, DAT companies have invested at least $42.7 billion into crypto acquisitions in 2025, with $22.6 billion deployed in the third quarter alone, marking the most robust quarter for accumulation to date.
Bitcoin-focused DATs accounted for the majority of this investment, having purchased over $30 billion in BTC, which constituted 70.3% of total acquisitions. Meanwhile, Ethereum-focused firms followed with $7.9 billion in purchases, primarily in August, while other cryptocurrencies made up the remaining 11.2% of annual spending.
