Why Most DATs Will Trade at a Discount, According to Bitwise’s Matt Hougan

• Bitwise CIO Matt Hougan said that structural drag ensures most DATs will trade at a discount.
• Only a few exceptional DATs can sustainably increase crypto-per-share and earn a premium.
• DATs that scale and operate efficiently will evolve into fully operational companies, Hougan said.

Bitwise Chief Investment Officer Matt Hougan believes that the next evolution of digital asset treasuries (DATs) is already taking shape and many of these firms will eventually transition into fully operational companies rather than passive crypto-holding entities. 

Speaking in a series of posts on X on Sunday, Hougan argued that the structural forces shaping DAT valuations leave little room for long-term premiums. This will eventually push most firms toward building real business models to survive.

Hougan said that most DATs currently rely on a narrow and uncertain set of tools to increase their “crypto-per-share,” while facing heavy and unavoidable downward pressures such as illiquidity, operating expenses, and execution risk. 

“Most will trade at a discount, and only a few exceptional firms will trade at a premium,” he noted and added that the sector faces a “high hurdle” by design.

A Structural Discount That DATs Cannot Ignore

Hougan’s model begins by treating a DAT as if it had a fixed lifespan, i.e., what would the company be worth if its assets were liquidated today, in a year, or over a longer horizon? 

He pointed out that investors will not pay full market price today for crypto they would only receive much later. The gap between immediate ownership and delayed delivery, he said, creates an automatic discount, one that widens with time, friction, and uncertainty.

Hougan brought to light two additional drags on valuation, i.e., expenses and operational risk. Every dollar spent on salaries, fees, or overhead reduces the value available to shareholders, while even small operational missteps must be priced into the market’s expectations. These forces, he said, are both predictable and unavoidable.

Expenses and risk compound over time, Hougan stated, warning that the drag only grows the longer a DAT attempts to operate as a perpetual holding vehicle.

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Limited Paths to Premiums 

There are ways DATs can grow their crypto-per-share, thereby overcoming some of the drag, Hougan said. However, he claims that the available levers are few, uncertain, and dependent on strong execution.

The four paths Hougan discussed include: issuing debt to buy crypto, lending tokens for yield using derivatives such as covered calls, and acquiring assets at a discount, absorbing other DATs trading below book value, and acquiring businesses with cash flow.

Large DATs would have better access to credit markets, deeper liquidity for derivatives, and more opportunities for discounted strategic acquisitions, Hougan added. 

DATs Will Be Forced to Build Real Businesses

Because the sources of drag are foundational while the sources of upside are conditional, Hougan claims that DATs will inevitably need to become operational companies, not merely crypto-holding vehicles, if they want to survive and create long-term value.

“Going forward, I think there will be more differentiation,” he wrote. “A few will execute well and trade at a premium, and many will execute poorly and trade at a discount.”

Hougan concluded that the only sustainable way for DATs to outperform their underlying assets is to generate revenue, reduce execution risk, and build scalable operational strategies. They will have to evolve into real businesses, not permanently leveraged Bitcoin or crypto trackers.

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