Bitwise Chief Investment Officer Matt Hougan emphasizes that digital asset treasuries (DATs) must take a more challenging approach to differentiate themselves and provide value to investors. According to Hougan, simply buying and holding a crypto asset is no longer a unique or difficult task, and investors may be better off investing in cryptocurrency exchange-traded funds (ETFs) instead.
Hougan suggests that one way to evaluate the worth of a DAT is to ask whether they are doing anything difficult. “Buying a crypto asset and putting it on the balance sheet today is not hard. It used to be hard, but it’s not hard now. If that’s all a DAT does, it’s better to own an ETF. That’s true even if the DAT is a stake, like ETFs are now,” he argued in an X post on Wednesday. Bitwise has launched several cryptocurrency-related ETFs, including a Solana (SOL) ETF that offers staking.
Key Factors to Consider in a DAT
According to Hougan, DATs can differentiate themselves by participating in the DeFi ecosystem through strategies like smart loans and other income-generating approaches, such as writing covered calls against crypto. “They’re not necessarily all good ideas, and not everyone will implement them well. But they’re not trivial, and if they’re done well, there’s a chance they’ll be rewarded,” he said. In contrast, DATs that take a lazy approach and simply buy and hold a crypto asset often trade at a discount to that asset’s value.
A Notable Example: MicroStrategy
Hougan cites Michael Saylor’s Bitcoin-holding company, MicroStrategy, as an example of a DAT that is “doing something difficult.” MicroStrategy is the largest holder of Bitcoin, with 641,205 Bitcoins (BTC) worth over $66 billion. “MicroStrategy already owns $64 billion worth of Bitcoin versus $8 billion in debt and is issuing debt for that position. It’s hard to have $56 billion of Bitcoin equity. Try raising $56 billion of equity to buy Bitcoin in a debt-free corporate structure. Not easy,” he said.
The Fleeting Gains of DATs
The number of crypto treasuries has surged this year, with 48 new cases of companies adding Bitcoin to their balance sheets, totaling 207 companies holding over a million tokens worth over $101 billion, according to an October report from Bitwise. However, questions are being raised about whether companies are turning to cryptocurrencies as a PR stunt to boost stock prices. A Wednesday report from CoinGecko found that DATs initially see stocks rise within the first 10 days, but the pumps are often short-lived, with the majority of DAT stocks “begin to tank in the days following their pivot.”
As Hougan concluded, “At the end of the day, DATs are just companies. Good companies are rewarded for doing difficult things well over time. Bad companies that perform poorly or try to take the easy route to riches are punished. That will be true in DAT land too.” For more information, visit https://cointelegraph.com/news/bitwise-cio-active-dats-outperform-etfs?utm_source=rss_feed&utm_medium=rss_tag_altcoin&utm_campaign=rss_partner_inbound
