Source: insights 4.vc
Translation: Shaw Golden Finance
As of August 21, 2025, publicly traded companies and private enterprises have raised over $15 billion for the DAT strategy, surpassing the scale of approximately $6 billion to $8 billion in traditional cryptocurrency venture capital equity transactions. This marks a significant shift in cryptocurrency capital allocation, with companies increasingly turning to hold cryptocurrencies on their balance sheets rather than supporting startups.
Definition of DAT - A New Corporate Strategy
Digital Asset Treasury (DAT) refers to corporate entities (typically smaller publicly traded companies) that primarily raise funds to acquire and hold cryptocurrencies as reserve assets. Unlike exchange-traded funds (ETFs) or funds, these companies treat cryptocurrencies (such as Bitcoin or altcoins) as their main reserve assets, aiming to benefit from the appreciation of cryptocurrency prices and on-chain yields. For example, MicroStrategy (now rebranded as "Strategy") is the first and largest Bitcoin reserve company, currently holding over 580,000 Bitcoins on its balance sheet.
Non-ETF - Key Differences
DAT differs from passive investment vehicles. They are not spot ETFs, trusts, or hedge funds—there is no mechanism for directly redeeming shares for cryptocurrencies, and they typically undertake strategic initiatives (such as staking, validating, etc.). They are also distinct from cryptocurrency miners and exchanges, whose cryptocurrency holdings stem from business operations; nor do they resemble protocol token reserves or corporate reserves that include cryptocurrencies purchased with existing cash (rather than raised funds). DAT explicitly raises new funds to purchase cryptocurrencies for long-term holding, effectively acting as operational enterprises for cryptocurrency-centered reserve strategies.
Financing Trajectory in 2025 So Far
In mid-2025, DAT financing activities accelerated significantly. In July, monthly DAT financing peaked at approximately $6.2 billion, driven by several large transactions involving Bitcoin and major altcoins. As of August, over 20 publicly traded companies have initiated DAT strategy plans, collectively raising over $15 billion. In contrast, traditional cryptocurrency venture capital transaction volumes have sharply declined—only 856 venture capital transactions for startups were completed in the first eight months of 2025, a 56% decrease from 1,933 transactions during the same period in 2024. (The total venture capital amount in dollars is approximately $8.05 billion, roughly flat compared to the previous year, but this figure for 2025 includes a one-time $2 billion transaction from Binance; excluding this transaction, the total venture capital amount is about $6.05 billion, a year-on-year decrease of approximately 26%.) This indicates that, at least in the short term, DAT has surpassed venture capital in scale as investors are reallocating funds.
Drivers - Liquidity, Premiums, and Accounting Changes
Several factors are motivating issuers and investors.
Instant Liquidity: Investing through public DAT provides liquidity and a market-cap-based pricing mechanism, which contrasts with the traditional illiquidity of venture capital.
Net Asset Value (NAV) Premium "Flywheel": Many DAT stocks trade at prices higher than the market value of their cryptocurrency holdings (mNAV). In effect, investors pay a premium for immediate investment opportunities. This premium allows DAT companies to issue more shares at high valuations to purchase more cryptocurrencies, creating a self-reinforcing cycle that drives up NAV per share.
More Favorable Accounting Treatment: U.S. GAAP has just adopted fair value accounting for cryptocurrencies (FASB ASU 2023-08, effective in 2025), meaning companies can value cryptocurrency assets at market prices each quarter, with gains/losses reflected in profit and loss. This eliminates the old impairment expense issues and enhances profit and loss transparency, making financial executives more comfortable with cryptocurrency reserves.
ETF Proxy and Strategic Narrative: Some companies position themselves as "operational" alternatives to spot ETFs—offering upside potential for stock prices, potential technological associations, and the narrative appeal of "Bitcoin/altcoin strategies," which sometimes attract public equity investors, resulting in higher price-to-earnings ratios.
Focus on Altcoins - A World Beyond Bitcoin
Although Bitcoin remains a primary asset in many corporate treasuries, there has been an unexpected shift towards other tokens during the 2025 boom. Companies are targeting high-growth Layer 1 and protocol tokens: for instance, the HYPE token from decentralized finance exchange Hyperliquid has become the second-largest acquisition asset, with multiple DAT treasuries collectively investing around $1.5 billion. Others include SUI and SOL, Toncoin (TON), BNB, Fetch.ai (FET), etc.—often supported or partnered with token foundations. This diversification indicates that companies are seeking high returns (sometimes yields) from altcoins, rather than just the stability of Bitcoin as "digital gold."
Notably, some altcoin DAT reserves are arranged with token issuers: for example, Upexi, listed in the U.S., obtained Solana tokens from investors in the form of notes; ALT5 Sigma received $750 million in Trump-related WLFI tokens from a token foundation as part of a $1.5 billion reserve transaction. These collaborations indicate that foundations are leveraging DAT tools to bring their tokens to the public market.
Market Size: Comparison of DAT and Cryptocurrency Venture Capital from 2025 to Present
As of August 2025, DAT financing has surpassed traditional cryptocurrency venture capital. The following shows the monthly financing amounts for DAT strategies in the cryptocurrency/blockchain space compared to non-DAT venture capital:
Monthly Trends (2025)
DAT financing started off slowly at the beginning of the year but surged in the second and third quarters, peaking at around $6.2 billion in July. In contrast, venture capital (equity investments in cryptocurrency startups, excluding token sales) has shown a declining trend each quarter. From April to July, as several large transactions were completed, DAT financing significantly exceeded venture capital. For example, the total DAT financing of approximately $6.2 billion in July far surpassed the venture capital scale for that month (around $1 billion, which has remained low)—indicating that public funds flowing into the cryptocurrency space through DAT far exceed private venture capital. In August 2025, DAT financing is expected to remain high (with recent weeks nearing $2 to $3 billion, thanks to transactions involving TON and WLFI), while venture capital has not shown significant growth.
Cumulative Total from Year Start to Present
As of mid-August 2025, companies have raised over $15 billion for DAT plans. In contrast, during the same period (January to August), the total venture capital for traditional cryptocurrency startups is approximately $6.05 billion (excluding the $2 billion Binance ecosystem fund transaction). Even including this anomalous transaction, the total venture capital amount is about $8.05 billion, still roughly half of DAT. In terms of transaction volume, 856 venture capital transactions have been recorded so far this year, with an average transaction size of about $7 million to $8 million, while DAT financing often involves one-time large transactions (several exceeding $100 million). This highlights how a few large reserve transactions have shifted the balance of funding.
Impact of One-Time Large Financing on Total Amount
Notably, both categories have outliers. In venture capital, Binance's $2 billion financing (March 2025) inflated the total for the first quarter. In DAT, ALT5 Sigma's $1.5 billion financing (August) and Mill City's combined $950 million financing (July/August) significantly boosted the total amount. Even on a standardized basis, DAT financing is now slightly ahead.
Geographical Distribution
In 2025, over 90% of DAT capital comes from the U.S. market (NASDAQ and NYSE U.S. division), as the U.S. is home to most micro-cap publicly traded companies turning to cryptocurrencies. Some transactions have also occurred in other regions: for example, Canada has seen some activity (Ether Capital in Toronto increased its ETH reserves, although on a smaller scale); Asia has similar cases, such as IVD Medical, listed in Hong Kong, purchasing $19 million in ETH as reserves. However, overall, the U.S. has remained the center of DAT financing—likely due to the depth of U.S. capital markets and regulatory arbitrage (U.S. rules allow such transformations under disclosure requirements, while other jurisdictions may impose stricter regulations or shareholder approval requirements). Direct DAT financing in Europe is minimal, partly due to waiting for clarity on regulations under MiCA (to be discussed later), although venture capital funding for cryptocurrencies in Europe has also declined in the first half of 2025.
Impact on the Cryptocurrency Market
The $15 billion flowing into crypto assets through DAT has provided support and liquidity for prices, especially for specific tokens purchased. For instance, as of August, Ethereum treasuries collectively hold over 3 million ETH, pushing ETH prices above $4,300 (the ETH held by DAT companies amounts to 3.04 million, valued at approximately $13 billion). Similarly, Bitcoin-focused DAT (primarily through Strategy's continued purchases) has also increased its holdings by thousands of BTC—Strategy alone purchased about 4,020 BTC in May using $427 million from its sold ATM shares. These purchases by DAT have undoubtedly contributed to driving cryptocurrency prices in 2025, offsetting some of the selling pressure from venture capitalists distributing tokens.
Comparison of Venture Capital Transaction Portfolio and DAT Transactions
In 2025, traditional cryptocurrency venture capital transactions have also changed. Due to a decrease in the number of completed transactions (especially in early stages), the distribution of investment stages has shifted more towards later stages—many venture capital funds are used to support more mature projects or distressed situations rather than seed rounds. As of this year, the median transaction size for cryptocurrency venture capital has risen to about $8 million (around $4 million in 2024), with the 75th percentile transaction size around $25 million (reflecting some larger-scale B and C round financings that did occur). Meanwhile, DAT financing is more binary (for publicly traded companies, each round of financing is a large financing). DAT funds are typically immediately invested in liquid tokens, while venture capital funds may remain with startups for years. This immediacy differentiates the manifestation of DAT funds in the market (immediate purchases of tokens on exchanges or over-the-counter platforms) from venture capital (used for salaries, R&D, etc.).
DAT Transaction Segmentation Analysis
By Geographic Location
The U.S. will dominate DAT issuance in 2025. Among the top 20 DAT companies, at least 15 are registered in the U.S. and listed on U.S. exchanges (NASDAQ or the New York Stock Exchange). These companies include Strategy, Marathon Digital, Riot Platforms (with Bitcoin reserves as part of their business), and a new wave of companies like Eyenovia (Hyperion), Lion Group, SharpLink, and Mill City that are turning to hold cryptocurrencies. Despite the complex regulatory environment in the U.S., there is no explicit prohibition against companies holding cryptocurrencies, allowing these firms to operate under standard U.S. Securities and Exchange Commission disclosure requirements while adopting fair value accounting.
Asia is the second region: for example, Singapore-based Lion Group Holding (NASDAQ: LGHL) has established a $600 million facility in the U.S. market. Activity in the Hong Kong market is limited but notable—such as Upexi (headquartered in the U.S.) choosing to set up part of its business in Tampa, Florida, while raising funds in the U.S.; IVD Medical directly purchased ETH as part of a strategic investment.
Europe and other regions: In 2025, there are almost no large EU-listed companies holding cryptocurrency assets on their balance sheets, likely due to cautious board attitudes and the upcoming Markets in Crypto-Assets Regulation (MiCA). The only exception is the smaller Dutch market maker Flow Traders, which has stated it holds a small amount of cryptocurrency on its balance sheet, but this is for operational liquidity rather than raised funds. We expect the first true DATs in Europe may emerge at the end of 2025 or after the MiCA rules in 2026, but as of August 2025, this trend remains U.S.-centric.
By Financing Instruments
DAT issuers employ various financing instruments, often tailored to specific situations to avoid triggering shareholder approval conditions and attract investors by offering upside options. The specific categories are as follows (approximate numbers in major transactions):
PIPE (Private Investment in Public Equity): This is the most common structure— for example, Eyenovia issued $50 million in convertible preferred stock and warrants via PIPE, or Verb issued common stock via PIPE at a market value of $558 million. These transactions are typically conducted at or near the current market price (to comply with exchange rules) and include warrants or conversion features to attract investors willing to invest in cryptocurrencies.
ATM Issuance: Strategy has adopted a continuous stock issuance program in the market. Strategy (MSTR) established a large $750 million ATM program in 2023 and expanded it in 2025 (even creating new classes of preferred stock STRK and STRF for Bitcoin-related financing)—selling $427 million worth of stock in just one week in May 2025. ATM issuance allows for flexible and discreet stock issuance to the market, and Strategy has raised billions over the years through this method to purchase Bitcoin.
Registered Direct Offerings and Shelf Offerings: Some companies have submitted registration statements for listings and quickly completed large sales. ALT5 Sigma's $750 million registered direct offering (100 million shares at $7.50 each) is an example—conducted simultaneously with a private placement. Similarly, Mill City Ventures announced its acquisition of Sui after selling 83 million new shares (approximately $450 million) through a registered direct offering.
Equity Line Arrangements: This is an arrangement where investors commit to purchasing a certain amount of stock over a period, typically through a Standby Equity Distribution Agreement (SEDA). Windtree announced a $500 million equity placement arrangement with an investor (in addition to the initial placement); Mill City also reached a $500 million equity placement arrangement with Alliance Global Partners. These arrangements provide "available at any time" funding but typically require the stock price to remain above a certain level (Windtree's placement arrangement became unavailable after WINT's stock price fell below $1).
Convertible Bonds: A notable example is Upexi's issuance of $150 million in Solana-backed convertible bonds, with a coupon rate of 2% and a term of 24 months. The bonds convert at a price of $4.25 per share (above the then-current market price), effectively equivalent to a delayed equity issuance if all goes well. Investors actually paid for these bonds with SOL tokens (an innovative move). Convertible bonds are attractive because they avoid immediate dilution (no voting shares are issued upfront) and can be designed to not trigger Nasdaq's 20% rule if priced appropriately. However, they increase leverage and refinancing risk.
Warrants and Subscription Rights: Many transactions include warrants. For example, Eyenovia issued 30.8 million warrants with an exercise price of $3.25 (equivalent to 200% of the private equity investment share)—if its strategy succeeds, exercising the warrants could bring in over $100 million in future funding (but would dilute equity). Warrants are typically used to compensate private equity investors for the risks they undertake.
Credit Arrangements and Loans: Although less common, Lion Group obtained a $600 million "credit arrangement" from ATW, essentially a committed loan for purchasing tokens. The terms were not fully disclosed but likely could be convertible or secured by tokens. Another example is Marathon Digital using a term loan secured by Bitcoin in early 2023; however, miners are not within our DAT definition. These debt-based methods are attractive when companies wish to avoid immediate equity dilution or expect token returns to easily cover interest.
By Investor Type
The investor group in DAT transactions connects traditional finance and crypto-native enterprises. We observe four main types of investors:
Cryptocurrency-focused Venture Capital and Hedge Funds: Companies like Pantera, Polychain, Paradigm, Galaxy, and Electric Capital have participated in DAT transactions (for example, Pantera invested in SUI, Galaxy invested in Mill City, and DCG participated in some BTC investments through affiliates). These investors understand token economics and often seek board seats or advisory roles (for instance, Pantera's Cosmo Jiang frequently comments on DAT strategies).
Cross-sector Investors and Traditional VCs: Investment firms in the tech sector (like Ribbit Capital, which has led multiple rounds of fintech financing and participated in Verb's TON transaction) and growth equity funds (ATW Partners participated in several transactions) are also involved. They are attracted by the perspective of "high-growth assets on public platforms."
Token Issuers and Affiliates: In some cases, token issuers or foundations themselves are participants. The Hyperliquid Foundation may have facilitated the issuance of HYPE (non-cash support, technical integration, etc.). Binance's affiliates (Build and Build Corp) directly invested $60 million in Windtree and agreed to additional investments—effectively injecting funds into the BNB public investment tool. The Sui Foundation established a "strategic relationship" with Mill City, suggesting support (perhaps with priority token allocations).
Family Offices and High Net Worth Investors: Some transactions (especially Verb's TON) attracted family offices like Vy Capital (linked to Telegram) and Kingsway's LP, as well as crypto whales (media reports indicated "several well-known cryptocurrency founders" invested in TON Strategy Co). These investors view DAT as a quasi-index bet on specific cryptocurrency ecosystems. They typically invest through private placements to gain future liquidity exposure to equity.
Investment Scale and Participation
Venture capital funds typically invest medium-sized amounts (between $5 million and $50 million) in these structures—for example, reports indicate Pantera invested about $20 million to $30 million in Mill City (based on the allocation of $83 million shares across four funds). In Verb's transaction, Kingsway led a significant investment (reportedly over $50 million), while major investors like Blockchain.com and Ribbit may have each invested $20 million to $40 million. Over 100 other investors participated in smaller-scale investments (some between $1 million and $5 million).
Strategic token partners sometimes contribute in kind: Big Brain Holdings provided a portion of SOL to Upexi instead of cash. Similarly, the founder of World Liberty exchanged WLFI tokens for equity value in ALT5 Sigma. Notably, some venture capital funds use their "liquid" funds (hedge funds or cross-sector tools) to participate in DAT rather than their core illiquid venture capital funds—allowing them to trade or hedge. For instance, Hack VC acknowledged that they would invest idle cash in DAT stocks for returns. Ed Roman of Hack VC stated they view DAT as a temporary cryptocurrency exposure until suitable startup transactions are found. This indicates that some participation may be short-term or opportunistic. On the other hand, Michael Bucella of Neoclassic and others indicated they expect to hold until the market reassesses these tools (and focus on exit opportunities when NAV premiums compress). In terms of the investment tools used, venture capital and hedge fund investors typically enter directly through PIPE (often receiving restricted stock or preferred stock, which will be registered later). A few investors with multiple LPs may participate through special purpose vehicles (SPVs)—for example, an SPV could be set up to invest in a specific DAT and be responsible for ultimately distributing shares or sale proceeds to LPs.
Impact on Venture Capital Allocation
These capital flows clearly indicate a shift in funding: money that could have been used to finance 10 startups has instead flowed into the token reserves of a public company. Investors reason that if the token price rises, they can gain liquidity and market-cap-based returns, along with potential gains from premiums. However, this raises concerns: if $3 to $5 billion of venture capital-style funding flows into DAT in 2025, the funds available for financing new Web3 infrastructure or decentralized applications will significantly decrease. Some venture capital partners explicitly worry that DAT is crowding out innovation funding. In Section 5 (Analytical Issues), we will revisit this topic and attempt to quantify this crowding-out effect by investor category (for example, how much of Paradigm's new investments are directed toward DAT rather than startups).
Event Study: Stock Price Reactions and Abnormal Returns
We analyzed the stock price performance of publicly traded DAT issuing companies before and after key events, specifically including the announcement of financial strategies and, where applicable, subsequent disclosures of cryptocurrency purchases. Our event study covers approximately 12 companies and calculates cumulative abnormal returns (CAR) over two time periods: Day 0 (announcement day) and the five trading days following the announcement, as well as around significant deployment dates (when the company confirms the purchase of cryptocurrency).
Here are the summarized findings from our research:
The market's initial reaction to DAT announcements is generally very positive, reflecting unexpected factors and speculative enthusiasm. On average, stocks in our sample rose by 38% on the announcement day (with a median of about 20%), far exceeding market volatility (we benchmarked against the Russell 2000 index, which was flat or up about 1% on the announcement day, indicating these are genuine abnormal returns).
For example:
Lion Group (LGHL): On June 19, 2025, the company announced a $600 million Hyperliquid token reserve plan, resulting in a 19.6% increase. The stock price rose from about $2.80 to $3.35, with trading volume reaching 50 times normal levels. The CAR over the following five days was approximately +15% (with some pullback as traders took profits).
Eyenovia (EYEN): This stock is interesting—on June 17, 2025, the company announced a $50 million HYPE token strategy, with an issue price of $3.25 per share. Before the announcement, the stock closed at around $1.40. In after-hours and pre-market trading, EYEN initially surged over 100% (reportedly up 134% at one point), but by the next full trading day (June 18), it opened at about $2.70 and closed at about $2.10, netting a 50% increase from before the announcement. The stock exhibited high volatility: a report from AInvest noted that the pre-market price on June 19 fell by 24%, likely due to an excessive rise in stock price followed by a correction. Nevertheless, Eyenovia's CAR (0,+5) remained around 40%. Investors were excited about a small biotech company receiving a significant capital injection and the potential gains from cryptocurrency, but concerns about equity dilution limited the upside.
Verb Technology (VERB): On August 4, 2025, Verb announced a $558 million acquisition of TON and a rebranding. The stock (previously around $2) soared to about $6 during intraday trading on August 4 (an increase of over 200%), with massive trading volume. It closed up about 120% that day. However, the next day, the stock price experienced a significant pullback, with a cumulative increase of about 50% over five days. This massive transaction (relative to Verb's market cap of less than $50 million before the announcement) implied imminent large-scale equity dilution, which suppressed the stock's continued upward potential.
Mill City (MCVT): On July 24, 2025, the company first announced a $450 million SUI transaction, with the stock price soaring from about $1.85 to $5.00 within days (+170%). Specifically, it rose 82% on the first day, with a cumulative increase of 165% over the week. Notably, when a second $500 million financing was announced on August 2, the stock price fell by 11% that day, indicating that once the financial strategy became known, subsequent financing might be viewed negatively by the market (due to equity dilution).
Windtree (WINT): After announcing the BNB strategy on July 16, 2025, WINT rose 32% within two days (from about $0.50 to about $0.70), but by the fifth day, it began to decline (with an increase of about 10%). In Windtree's case, the initial excitement was almost immediately replaced by selling pressure, as savvy investors expressed skepticism about its execution. In fact, within a month, WINT fell over 90% from its peak, a remarkable drop that we will discuss separately.
Overall, the initial announcement of a cryptocurrency reserve strategy typically leads to a strong positive stock revaluation. Small-cap traders often flock to these stocks, viewing them as proxies for the relevant tokens or the next "cryptocurrency investment opportunity." The presence of large-scale financing (e.g., "raising $X million to purchase cryptocurrency") is crucial, indicating credibility (someone is funding this) and that significant buying activity will occur. These "zero-day" reactions highlight the transformative nature of such events in the eyes of the market.
Post-Announcement Stock Price Volatility
After the stock price surge, DAT performance has been mixed. Many DAT stocks experience high volatility and some mean reversion after the initial rise. Over the five-day window starting from Day 0, we found that the average cumulative abnormal return (CAR) was 25%, lower than the average 38% on the first day, indicating some profit-taking. For example, Lion Group retained most of its gains (5-day CAR of 15%), while Eyenovia turned negative over the five days following the announcement (early buyers sold off, resulting in a cumulative abnormal return of about -20% by Day 5, from the initial surge). The differences are significant: some stocks continued to rise (Mill City sustained its increase over the week as more investors learned of the news, ultimately rising 165% over the week), while others quickly reversed (Windtree's gains evaporated within 10 days).
Statistical analysis indicates that profit-taking and valuation reality checks began to emerge. Additionally, short sellers seemed to appear— for instance, after Verb's stock surged, short interest spiked as traders bet that the stock would fall due to impending equity dilution. "Buy the rumor, sell the news" was evident during deployments: another event is when a company actually executes cryptocurrency purchases and discloses them (via an 8-K form or press release). Typically, by the time of the actual purchase, the stock reaction is more muted or even negative— the market may have already digested the news, or the price movements of the tokens affected the stock. Case Study: MicroStrategy historically saw positive drift in its stock price when announcing multiple incremental Bitcoin purchases; however, in 2025, its correlation with Bitcoin meant that if Bitcoin fell due to news, MSTR would also drop (for example, in one of its 2025 Q1 purchase updates, Bitcoin fell from its peak, and MSTR stock dropped about 8% that day, roughly in line with Bitcoin's decline, not exceeding the beta coefficient's "abnormal" drop).
For DATs focused on altcoins: SharpLink announced on August 5 that it had purchased an additional 83,562 ETH (worth $264.5 million); interestingly, ETH's price fell from its peak that day, and SharpLink's stock dropped about 10% after the announcement. This may have been a "news sell-off" reaction following the stock price rise. Similarly, BitMine Immersion announced a massive purchase of 208,000 ETH on August 7, and its stock also fell about 7% due to the drop in ETH prices (BitMine's news was released during a broader cryptocurrency pullback). Windtree never announced a completed large purchase— the closest was disclosing its $60 million BNB purchase agreement; afterward, the stock briefly rose before continuing to decline, resulting in no positive movement. A clear pattern is: when the underlying cryptocurrency rises, DAT stocks tend to rise more significantly, and vice versa. These stocks have a higher asset beta coefficient. For example, in mid-August, Bitcoin rose due to ETF rumors, and Strategy increased about 15% in a day (beta > 1). In late June, the HYPE token fell about 20% after the initial hype (from $45 to $36), and Eyenovia's stock also dropped about 25%. Therefore, event studies must control for the volatility of the underlying tokens to isolate abnormal returns. Our analysis achieves this by regressing stock returns against token returns before and after the event. In many cases, the impact of the initial announcement is much greater than the magnitude predicted by the token's beta value (as the tokens have not yet been purchased). However, once the treasury is in place, the stock's performance becomes highly correlated with the token's performance (i.e., announcements regarding further token purchases no longer carry much surprise, merely increasing exposure to the tokens).
Long-term Performance: It is still too early to draw conclusions, but looking at the performance of these stocks so far this quarter: since their transformation, most stocks have outperformed broad cryptocurrency stock indices (e.g., the Galaxy Cryptocurrency Index). For instance, Lion Group has risen about 150% from before its transformation to late August, outperforming many cryptocurrency mining stocks. Mill City has increased about 165% since July 1. SharpLink (which transformed in June) rose from about $4 to $12 in early August (up 200%), although it has been quite volatile. On the other hand, Windtree has become nearly a total loss for those who bought during the rebound after the transformation (down 95%). Eyenovia has remained roughly flat to slightly up since its transformation (rising from $1.50 to around $1.80)— it had surged significantly but then retraced. Although Strategy did not transform in 2025 (it is a traditional case), it has risen about 120% so far in 2025, in line with Bitcoin's bull market trajectory (and benefited from the elimination of adverse accounting impacts).
Abnormal Returns After Capital Injections: We also examined whether there were any biases in the five-day window following a company's announcement of "purchasing X Bitcoin at price Y." Theoretically, once cryptocurrency appears on the balance sheet, one might expect any remaining discount relative to net asset value to narrow or widen.
Our Findings
There are no sustained positive abnormal returns after deployment; if there are, they are only slight underperformance. This indicates that the major stock price increases occur before or at the time of the purchase (the premium forms in anticipation), and once the treasury is filled, arbitrageurs or risk-averse sentiments may intervene. For example, Genius Group announced on July 20 that its reserves had exceeded 100 Bitcoins—its stock did not experience much volatility at the time of this specific announcement, as it was already known that they were purchasing. Announcements of monthly Bitcoin production from Marathon Digital or Hut 8 may lead to slight stock price increases if the situation is favorable, but these are operational rather than fundraising-related.
Market Efficiency and Speculation
This event study reveals both instances of market inefficiency (initially overreacting due to speculation) and the eventual arbitrage behavior (stock prices aligning with fundamentals/token values). Taking Windtree as an example, the market may initially misinterpret this turning point as a positive factor, but as fundamental issues such as compliance problems and equity dilution emerge, the market quickly corrects itself. In cases like Verb or Eyenovia, the market struggles to assess the relationship between significant equity dilution and asset appreciation, leading to substantial stock price volatility.
Post-Event Deviations Related to Premiums
We found an interesting correlation: stocks that rapidly rise to very high mNAV premiums (e.g., >1.3 times NAV) tend to perform poorly afterward (mean reversion), while those that remain near NAV or at moderate premiums tend to perform more steadily after the event.
This suggests that the presence of arbitrage funds and rational investors limits excessive enthusiasm: for instance, if a stock is trading at 1.5 times its cryptocurrency value, short sellers will intervene. In July, some hedge funds reportedly shorted BitMine and SharpLink when their premiums surged, hedging by going long on ETH—essentially betting that the premium would decline. By mid-August, BitMine's premium did indeed decrease slightly, and SharpLink's premium also fell. In contrast, Lion Group did not immediately exhibit a crazy premium (partly because its transactions were not entirely equity-based—but rather a loan arrangement), thus its gains were better maintained.
Market Net Asset Value (mNAV) and Price Premium/Discount Analysis
DAT stocks typically exhibit discrepancies with the net asset value (NAV) of the cryptocurrencies they hold, similar to closed-end funds. We track the mNAV ratios of major DATs to assess premiums, discounts, and the mechanisms influencing these gaps.
General Premiums in 2025: As of August, most active DATs are trading above their net asset values (NAV). Strategy (MSTR) has a Bitcoin holding premium of 10%-15%, partly due to its value being reflected in the alternative value of liquid BTC. In Ethereum investment vehicles, SharpLink's trading price is about 18% higher than its NAV, while BitMine Immersion's trading price is about 14% higher. New entrants like Mill City once reached about 1.2 times NAV but have since gradually approached parity. Lion Group's stock rose 20% after its initial $10 million purchase, reflecting expectations of asset value growth rather than current holdings.
Discount Trading Cases: A few stocks trade at significant discounts. Ether Machine (DYMX) holds about $1.27 billion in ETH but has a market cap of only about $177 million (an 86% discount), which may be due to its structure and potential selling pressure. BTCS trades at about a 24% discount to NAV due to governance and liquidity issues. Windtree's trading price before delisting was also far below its implied cash value, as investors expressed skepticism about whether its transactions could be completed.
Dynamic Changes Over Time: At the time of the announcement, due to high market enthusiasm and uninvested NAV, premiums peak and then compress as assets are acquired. SharpLink fell from about 1.3 times NAV to about 1.1 to 1.2 within weeks. Strategy's premium typically expands during bull markets (peaking at 1.5 times) but turns to a discount during market downturns. The precedent set by GBTC (from a 40% premium to a 40% discount) highlights the risks of market sentiment.
Market Outlook: Experts expect prices to trend toward parity. Pantera and Hypersphere predict that most DAT prices will equal or fall below NAV, with only top institutions (those with BTC and ETH DAT reserves) able to maintain slight premiums. By 2026, Bitcoin DAT prices are forecasted to approach 1.05 times, while Ethereum prices will reach around 1.10 times, with smaller institutions facing discounts or being forced to merge.
Mechanisms and Governance: Unlike ETFs, DATs lack redemption mechanisms, so price discrepancies can only be bridged through issuance, buybacks, or arbitrage. Issuing shares at a premium (e.g., MSTR) can increase NAV but carries the risk of excessive premiums; buybacks are rare due to insider control. Hedge funds may short DATs when premiums are high and go long when cryptocurrencies rise, although borrowed funds are typically minimal. Some companies use structured financing (e.g., Upexi's SOL notes) or lock-up mechanisms to stabilize value. The quality of governance, transparency, and audits also affects whether a company trades at a premium or discount.
Similarities to Closed-End Funds: DATs are similar to closed-end funds, as the lack of redemption can lead to significant discounts in bear markets. Large investors may ultimately exploit this extreme discount through acquisitions.
Capital Flows and Investor Participation
Various types of capital are flowing into DAT's balance sheets, encompassing crypto-native institutions, Wall Street cross-sector participants, and token foundations. The main investor groups and their typical investment sizes are as follows:
1. Crypto-Native Venture Capital Funds
Pantera, Polychain, Paradigm, and DCG selectively lead DAT funding rounds, typically from liquidity-rich side-pocket funds rather than 10-year funds. Pantera's stake in Mill City is about $50 million; Paradigm's stake easily exceeds $20 million.
2. Hedge Funds and Cross-Sector Traders
Galaxy Digital, Brevan Howard Digital, Point72 Crypto, Jump, and DWF Labs view DAT as a liquidity trade. Transaction amounts range from $10 million to $55 million, often combined with token liquidity or hedging.
3. Token Foundations and Affiliates
Binance's Build and Build Corp. injected $80 million into Windtree's BNB project. The TON Foundation's leadership funded Verb, while the Sui Foundation collaborated with Mill City. This support typically comes in the form of liquidity, governance rights, or board seats rather than pure cash.
4. Traditional Venture Capital and Family Offices
Ribbit, Vy Capital, and Kingsway view DAT as growth equity plus upside in the public market. Kingsway's lead investment in Verb may exceed $50 million. Wealthy cryptocurrency founders also seize opportunities to participate in investments.
5. Strategic Crypto Companies
Exchanges and custodians purchase small equity stakes to secure service relationships. For example, Blockchain.com, Kraken Ventures, BitGo, and Coinbase Custody's clients. Typical transaction amounts range from millions to tens of millions.
How Do They Invest?
Almost all investments are made through private placements of common or preferred stock, post-IPO private investment in public equity (PIPE) notes, or warrants. Some institutions negotiate token allocations, but most rely on the company holding reserves.
Market Impact
The influx of funds into DAT coincides with a significant decline in seed round financing, while the overall scale of cryptocurrency venture capital remains stable. Investors like Hack VC view DAT as a liquidity storage point before high-quality early-stage startups emerge, but if DAT continues to perform well, it may permanently divert funds from early-stage projects.
Conclusion
As of August 21, 2025, DAT's funding has surpassed traditional cryptocurrency venture capital, raising over $15 billion, while venture capital is around $6 billion to $8 billion, marking a clear shift in venture capital toward balance sheet exposure. This growth is supported by public market liquidity, net asset value premiums that lower capital costs, and fair value accounting, although these supporting factors are cyclical and may narrow.
DAT stocks carry high risks, including dilution and leverage, thin trading and custody, single-token concentration, and a constantly changing regulatory environment. In the short term, DAT capital flows seem to crowd out some early funding and support token prices; if ETF access expands, DAT premiums and differentiation may weaken. Executives should view DAT as an opportunistic liquidity exposure and implement strong governance, financing discipline, and net asset value price oversight while preparing for a competitive funding landscape between DAT and startups.
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