Bitwise Chief Investment Officer Matt Hougan has outlined a valuation framework for digital asset treasury companies (DATs), emphasizing that the sector's analysis often misunderstands how these firms should be priced relative to the assets they hold.
In a series of posts, Hougan stated that the core question for valuing any DAT is to consider what the company would be worth if it had a fixed lifespan.
Illiquidity, Expenses, and Risk
Hougan explained that a Bitcoin-focused DAT announcing a same-day shutdown and distribution of its holdings would trade exactly at the value of its bitcoin, or an mNAV of 1.0. However, extending the liquidation timeline to one year introduces conditions that can push valuations above or below the underlying asset value.
Hougan identified three main factors that justify a discount to mNAV: illiquidity, expenses, and risk. Illiquidity reflects the lower price investors would pay today for Bitcoin they would receive in a year, and Hougan suggests that this discount could be in the range of 5-10%. Expenses directly reduce investor value; for instance, a DAT holding $100 worth of BTC per share but paying executives $10 per share per year would warrant a corresponding 10% discount. Risk, defined as the possibility of operational errors or other failures, must also be factored into pricing.
On the other hand, the Bitwise executive noted that DATs may trade at a premium only if they are increasing their crypto-per-share. He pointed out that in the United States, this is the sole reason for such a premium. He identified four strategies that DATs employ to achieve this increase: issuing USD-denominated debt to buy crypto, lending out crypto to earn interest, using derivatives such as writing call options to generate additional income, and acquiring crypto at a discount.
Discounted acquisitions can be achieved through purchasing locked assets from foundations seeking liquidity, acquiring another DAT that is trading below its asset value, repurchasing its own discounted shares, or buying a cash-flow-generating business and allocating the proceeds to crypto.
The "High Hurdle" for Premiums
Hougan added that discount factors tend to be certain, while premium-enabling factors tend to be uncertain. This dynamic creates what he described as a high hurdle for most DATs. Consequently, he stated that most companies will trade at a discount, with only a limited number of strong performers trading at a premium. Using the example of a Bitcoin DAT scheduled to liquidate in 12 months, he suggested that fair value can be estimated by calculating expenses, adding a risk discount, and offsetting these with expectations for increases in bitcoin-per-share.
Although DATs do not have fixed lifespans in practice, the executive explained that this scenario extends rather than changes the model. This is because expenses and risks compound over time, while companies that can consistently grow their crypto-per-share may become highly valuable.
He also mentioned that larger DATs possess structural advantages. These include easier access to debt markets, larger pools of crypto for lending purposes, deeper options markets, and broader opportunities for mergers, acquisitions, or other discounted deals. While DATs have largely moved in tandem over the past six months, Hougan anticipates greater divergence ahead. He expects a small number of firms to execute well enough to trade at a premium, while many others will trade at a discount.
DAT Investment Trends
According to a recent report from CoinGecko, DAT companies have invested at least $42.7 billion into crypto acquisitions in 2025. The report found that $22.6 billion was deployed in the third quarter alone, marking it as the strongest quarter on record for accumulation. Altcoin-focused DAT companies accounted for $10.8 billion, or 47.8%, of Q3 spending, but Bitcoin-focused firms continued to dominate overall activity.
Since the start of 2025, Bitcoin DAT companies have purchased more than $30 billion in BTC, representing 70.3% of total acquisitions. Ethereum counterparts followed with $7.9 billion in purchases, most of which occurred in August. SOL, BNB, WLFI, and other assets made up the remaining 11.2% of annual spending.