Bitwise Chief Investment Officer Matt Hougan recently argued that most Digital Asset Treasury (DAT) companies are likely to trade at a discount to the value of their crypto holdings. He points to structural headwinds — illiquidity, high expenses, and execution risk — as key factors that weigh on their valuations, while only a few firms that aggressively grow their crypto-per-share should command a premium.
Why Most DATs Are “Discounted,” According to Hougan
In his public commentary, Hougan breaks down the valuation discount many DATs face into three main components:
- Illiquidity: Many crypto holdings are not immediately transferable or liquid, so investors demand a discount for that lack of access.
- Expenses: Operating costs — including executive compensation, infrastructure, and operational overhead — eat into the value per share.
- Risk: Execution risks — mistakes, market shifts or bad strategic bets — increase uncertainty, causing further discounting.
Hougan has said:
“…most of the reasons they should trade at a discount are certain, and most of the reasons they might trade at a premium are uncertain.”
Which DATs Might Trade at a Premium — The “Hard” Players
Not all DATs are equal, according to Hougan. He believes only the “hard” or deeply strategic ones deserve a market premium: those that go beyond just buying and holding crypto, and instead execute complex, value-adding strategies.
He outlines four main levers that can grow crypto-per-share:
- Issuing Debt: Borrowing fiat (USD) to buy more crypto, thus increasing holdings per share.
- Lending Tokens: Earning yield on the crypto holdings via lending, which compounds the base.
- Using Derivatives: Employing options strategies or similar to generate additional value, though with some tradeoffs.
- Discounted Acquisitions: Buying assets at a favorable price, repurchasing shares, or acquiring cash-flow businesses to boost the crypto-backed value.
Hougan also singled out Strategy (formerly MicroStrategy) as a prime example of a DAT using ambitious, capital-structure tools.
Market Implications & Risks
- Sector bifurcation: Hougan expects a growing split between DATs that execute “hard” strategies and those that simply hold crypto. The former could sustain premiums, while the latter may struggle under discount pressure.
- Investor selection: According to him, investors should assess DATs not just on net crypto holdings (sometimes referred to as “mNAV”), but also on how effectively they can grow per-share exposure.
- Risk of underperformance: For DATs that lack scale or sophisticated strategy, the drag of costs and risk may prove persistent.
What to Watch Next
- Which DATs scale “hard” strategies: Investors and analysts will closely follow which firms issue debt, lend, or use derivatives to boost crypto-per-share.
- Premium compression or differentiation: Whether more DATs start trading at a premium again, or if discounts widen for passive players.
- Sustainability of strategies: How well the “hard” strategies perform over time and whether they deliver consistent growth in crypto-per-share.
- Mergers or exits: Smaller DATs struggling with discount pressure may consolidate or pivot their business models.
Bottom Line: Matt Hougan’s assessment provides a framework for evaluating DATs beyond surface-level NAV metrics. He warns that most will trade at a discount unless they can run sophisticated, value-creating operations that grow their crypto-per-share — and only a handful of “hard” DATs may be able to command a premium in the long run.
GRAEYN12
