In ancient times, there were the demonic sword Muramasa, and today there are the waist-sword coin-share DATs—why have coin-share DATs evolved into "cut in half as soon as the official announcement is made"? (Cut in half? Or demonic slash?) Are early investors dumping their holdings? Is the market simply not buying? This isn't a market failure or a random panic, but a predictable, rational market repricing process. It signals a shift in market sentiment from a frenzy of enthusiasm for a novel story to a sober examination of a company's financing mechanisms, equity dilution, and true per-share value.
Part 1: Deconstructing the “Coin-Stock” DAT Model
1.1. Definition and Core Logic: A Bridge Connecting Traditional Finance and the Crypto World
In recent years, a new type of publicly traded company has quietly emerged at the intersection of cryptocurrency and traditional finance. Investors often refer to them as "coin stocks" or "digital asset treasury concept stocks." In the professional financial sector, these companies are defined as "Digital Asset Treasury Companies" (DATs). Their core business model relies on strategically accumulating cryptocurrency assets (typically mainstream assets like BTC/ETH/BNB/SOL) on their balance sheets as part of their core business functions.
Unlike traditional companies holding cryptocurrencies, DATs operate with the explicit purpose of actively and explicitly accumulating holdings of crypto (digital) assets. In this way, they provide investors in traditional capital markets with a regulated, equity-based vehicle to gain exposure to crypto assets. This model serves a specific market need: many large institutional investors, such as pension funds, sovereign wealth funds, and endowments, are unable to directly purchase and hold cryptocurrencies due to internal compliance, custody complexities, or regulatory restrictions. DATs, whose shares are traded on mainstream exchanges like the New York Stock Exchange and Nasdaq, provide a compliant bridge for these restricted capital to enter the crypto space.
A pioneer of this model is Strategy Inc. (formerly MicroStrategy), led by Michael Saylor. Starting in 2020, the company began converting significant cash reserves into Bitcoin, setting a precedent for publicly traded companies to use Bitcoin as a holding tool. This move not only reshaped the market's perception of how companies view Bitcoin—from a purely speculative asset to a strategic reserve asset capable of protecting against the devaluation of fiat currencies—but also provided a replicable template for subsequent companies.
Since then, this trend has gradually spread globally. For example, Metaplanet, a Japanese listed company, has adopted a similar strategy, reflecting the demand for such investment tools in capital markets across different regions. The emergence of these companies signals that crypto assets are moving from the margins to the mainstream and becoming increasingly integrated into the global macro-financial system.
Table 1: Overview of major cryptocurrency asset finance companies
Note: Data is as of August 2025. Market capitalization and crypto asset holdings will fluctuate with the market.
1.2. Key Concepts and Value Propositions: Investors’ Professional Dictionary
To accurately evaluate crypto-equities, investors must look beyond traditional metrics like price-to-earnings or price-to-book ratios and master a set of analytical vocabulary specifically designed for this model. These concepts are key to understanding both its value proposition and inherent risks.
Net Asset Value (NAV): This is the cornerstone of valuing a DAT and refers to the total value of the company’s digital assets at current market prices. It represents the “true” intrinsic value of the crypto assets on the company’s balance sheet.
Equity Premium to NAV (mNAV): This is a core concept in understanding crypto-equity valuation. It quantifies the premium of a company's stock market capitalization relative to the net value of the digital assets contained in each share. This metric is typically expressed as a multiple (mNAV, or multiple of NAV). For example, if a company's mNAV is 2.0x, its stock price is twice the value of the BTC contained in each share. A high mNAV reflects market optimism, expectations of future asset accumulation, the stock's scarcity, and the convenience premium it offers as a compliant investment vehicle. Conversely, a shrinking mNAV signals waning market confidence.
Bitcoin Yield (BTC Yield or Crypto Yield): This is a key performance indicator (KPI) proposed and actively promoted by DAT management. It measures the growth rate of BTC (or other crypto assets) per fully diluted share over a specific period. A positive BTC Yield indicates that the company's financing to acquire new assets is outpacing the dilution of equity, resulting in an increase in each shareholder's nominal BTC holdings. However, this metric requires critical examination. If the stock price declines significantly over the same period, shareholders may experience a loss in actual wealth even if the BTC Yield is positive. Therefore, this metric must be analyzed in conjunction with stock price performance and mNAV trends to fully assess its true value to shareholders.
1.3. A leveraged proxy tool: Comparison with BTC ETFs
With the approval of US spot BTC ETFs in 2024, investors will have access to a direct, low-cost tool for tracking BTC prices. This makes the difference between DATs and ETFs particularly important, as they offer investors vastly different risk-return profiles.
Active Management vs. Passive Tracking: ETFs are designed to replicate the price performance of their underlying asset (i.e., Bitcoin) as accurately as possible, making them passive investment vehicles. In contrast, DATs are actively managed entities. Their management must make key decisions regarding capital allocation, fundraising timing, choice of financing vehicle (equity or debt), and asset acquisition strategy. Investing in a DAT is not only an investment in Bitcoin, but also an investment in the management team's capital management capabilities.
Built-in leverage: Investing in DAT stock is essentially a leveraged bet on Bitcoin. This leverage stems from two factors: First, companies may finance Bitcoin purchases through debt instruments such as bonds, which creates financial leverage. Second, the mNAV premium itself has a leverage effect. When market sentiment is high, a 1% increase in Bitcoin price can drive a 2% or more increase in DAT stock price, and vice versa.
Unique risk exposure: ETF risks primarily stem from Bitcoin's price volatility. DATs, on the other hand, carry company-specific risks, including execution risk, regulatory challenges faced by listed companies, and, most importantly, financing risk, including equity dilution and debt refinancing.
In summary, DATs are not simply "cryptocurrency holding companies" but should be viewed as complex financial instruments. They provide investors with leveraged exposure to cryptocurrencies like Bitcoin through active capital market operations, but this also introduces multiple risks inherent in traditional equity investments and financial engineering.
Part II: Capital Flywheel: Financing, Reflexivity, and Market Impact
The core driving force of the DAT model lies in its unique financing mechanism, which, under favorable market conditions, can form a powerful, self-reinforcing positive feedback loop, known as a "capital flywheel." However, this flywheel is also bidirectional, its direction of rotation being entirely dependent on market sentiment and capital market liquidity.
2.1. Financing Engine: How Capital is Created
DATs primarily raise funds for digital asset purchases through two complex financial instruments that are cleverly designed to maximize the leverage of companies’ high stock prices and market expectations of their future growth.
At-the-Market Equity Programs (ATM): This is the most common and efficient financing method for DATs. ATM programs (e.g., directly "withdrawing" from the market) allow companies to sell newly issued shares directly on the open market in small, tranches at the prevailing market price, based on market conditions. This method is extremely flexible and avoids the roadshows and discounted offerings required for traditional large-scale offerings. However, it is also a major cause of dilution of existing shareholders' holdings.
Convertible Notes: These are hybrid financing instruments. Essentially, they are low- or zero-interest bonds issued by a company, but they come with an option: under certain conditions, bondholders have the right to convert the bonds into company stock. They are an extremely attractive financing method for companies, as they allow them to borrow large amounts of capital at interest rates significantly below market levels. For example, MicroStrategy has repeatedly issued convertible notes with interest rates as low as 0% or 0.625%, raising billions of dollars. For investors, these bonds offer an asymmetric benefit: a guaranteed downside (at least the principal will be recovered) and upside potential (the option to convert to stock and profit if the stock price rises). However, these instruments also create a potential dilution risk for the company: if the stock price rises significantly and exceeds the conversion price, a large number of bonds will be converted into stock, resulting in a sharp increase in total share capital.
2.2. “Flywheel Effect”: Amplifier of Gains and Losses
The operation of the DAT model perfectly illustrates the theory of "reflexivity", that is, there is a dynamic feedback loop between the expectations of market participants and market fundamentals, which influence and reinforce each other.
Upward spiral (positive feedback in a bull market): In a bull market, the flywheel generates a strong positive driving force. Its operating logic is as follows:
The rise in BTC prices has triggered optimistic market expectations for DAT.
Optimistic expectations drive DAT's stock price up with a higher beta coefficient (i.e., a larger increase), thereby widening its mNAV premium.
The high mNAV premium makes the company’s financing activities “value-added.” For example, a company can raise $1.5 in cash on the market with $1.5 worth of stock, then use this money to buy $1 worth of BTC, and use the remaining $0.5 as the company’s value-added.
A large amount of funds raised through ATMs or the issuance of new bonds were used to purchase more BTC, which further increased the company's net asset value (NAV).
The company's asset growth and continued purchasing actions, in turn, reinforce its market narrative as a "BTC growth engine," attracting more investors and further pushing up its stock price and mNAV premium, thus completing a positive feedback loop.
Downward spiral (negative feedback in a bear market): The fragility of this flywheel lies in its high dependence on market sentiment. Once the market turns bearish, the flywheel will quickly reverse, forming a "death spiral":
The drop in BTC prices triggered pessimism in the market.
DAT's stock price fell even more due to its high beta and leverage effect, causing the mNAV premium to shrink rapidly or even turn into a discount.
At this point, any financing through the issuance of new shares will be "dilutive", that is, the cash obtained from the sale of shares is not enough to offset the dilution of existing shareholders, which makes financing through ATMs impractical or extremely destructive.
The drying up of financing channels shattered the company's growth narrative of continued accumulation of BTC, leading to a collapse in investor confidence and a sell-off of stocks.
The further decline in stock prices caused the company's market value to fall far below the value of its BTC holdings, resulting in a severe discount, which in turn triggered a more violent sell-off, forming a vicious cycle.
Part III: The Mystery of DAT’s “Official Announcement and Immediate Cancellation”: Multi-factor Risk Analysis
The plummeting share prices of most "cryptocurrency stocks" following official announcements weren't simply a fluctuating market sentiment, but rather a concentrated reflection of the inherent risks of their business models. This phenomenon stems from the interplay of multiple factors, including equity dilution, market psychology, leverage mechanisms, and valuation logic. The stock price crash can be understood as a dramatic shift from the market's initial "narrative-driven valuation" to the more stringent "fundamentals-driven valuation."
3.1. Dilution Engine: Quantitative Analysis of MicroStrategy
Dilution is the inherent sin of the DAT model and the key to understanding its long-term stock price performance. While management tends to tout the growth of its total assets, the only meaningful metric for stock investors is the value of its assets per share.
Take, for example, MSTR (MSTR), the pioneer and largest practitioner of this model. Since implementing its BTC strategy in 2020, the company's total share capital has experienced explosive growth. Data shows that its fully diluted outstanding shares surged from approximately 97 million in mid-2020 to over 300 million by mid-2025, an increase of over 200%. This means that to raise funds for BTC purchases, the company's equity pie was cut into three times more shares than before.
At the same time, the company's BTC holdings have grown from zero to over 630,000. So, how did this race between "holding increase" and "dilution" ultimately affect shareholders' BTC exposure per share? The data analysis in the table below clearly illustrates the answer.
Table 2: Strategy Inc. (MSTR) Dilution and BTC Per Share Analysis (2020–2025)The above chart clearly reveals a key trend: despite the continued growth of Strategy Inc.'s total BTC holdings, its "BTC per share" has experienced significant fluctuations and has recently shown a clear downward trend. In the early stages of the strategy, the company's BTC accumulation outpaced equity dilution, resulting in an increase in BTC content per share. However, with the expansion of financing and stock price fluctuations, particularly after 2025, large-scale equity financing has caused the denominator (number of outstanding shares) to grow faster than the numerator (BTC holdings), leading to a dilution of the actual BTC content per share.
This quantitative conclusion: continued equity financing, even to acquire promising assets, can actually dilute the value of existing shareholders. When the market shifts from a fanatical focus on "total holdings" to a rational examination of "per-share value," downward stock price corrections are inevitable.
3.2. The Psychology of Crashes: Crowded Trading and Narrative Bankruptcy
The plunge in "crypto-stocks" is also a typical case of market psychology, the core of which is "crowded trade" and the subsequent "narrative bankruptcy."
A crowded trade occurs when a large number of investors, driven by similar logic and strategies, collectively hold the same asset, creating inherent risk—risk stemming not from asset fundamentals but from market structure itself. DATs perfectly fit the characteristics of a crowded trade: a simple, alluring narrative ("the next MicroStrategy," "leveraged BTC stocks") attracts a massive influx of speculative capital with similar views.
This crowded structure set the stage for wild price fluctuations. Another user's hypothesis—"early investors needing to cash out"—pointed to the trigger for the collapse of the crowded trade. Early investors, especially institutions that entered at lower valuations through methods like private equity investments (PIPEs), had a strong incentive to sell shares to lock in profits when companies announced their strategies and market sentiment peaked. Their selling behavior created the first wave of selling pressure.
When the initial hype subsides, market participants' attention shifts from grand narratives to the dry business of financial statements and SEC filings. Investors will discover that every "successful" financing round and announcement of increased BTC holdings is accompanied by a continuous increase in outstanding shares and a steadily diluting per-share value. This shift in perception from "story" to "numbers" lies at the heart of narrative bankruptcy. Once the market realizes the flaws in the growth story supporting high premiums, crowded trading will quickly reverse, creating a stampede-like exodus and sending stock prices plummeting.
3.3. The Mechanics of Volatility: Leverage and Forced Selling
The inherent structure of the DAT model and investors' trading behavior jointly amplify stock price volatility.
First, financial leverage at the company level is a major source of volatility. By issuing bonds to purchase Bitcoin, the company's balance sheet is leveraged, which means that its shareholders' equity is more sensitive to changes in the price of the underlying asset.
Secondly, while DATs don't face the same "margin liquidation" risks as cryptocurrency derivatives, a similar risk of "forced deleveraging" remains. When stock prices plummet and the mNAV premium shrinks significantly, a company's ability to issue new shares through ATM programs will be severely weakened or even completely eliminated. This is because issuing additional shares at this time would be highly dilutive, tantamount to "drinking poison to quench thirst." The interruption of financing channels means the capital flywheel has stalled, which is a fatal blow to a company that relies on continuous financing to maintain its growth narrative. The market will interpret this as a major negative factor, triggering even more intense selling, creating a self-reinforcing negative feedback loop.
Furthermore, investors holding DAT shares may themselves use leverage (e.g., through margin accounts with brokerages). When the stock price declines, these investors may face margin calls, and if they fail to meet the requirements, their positions will be forcibly liquidated, exerting additional downward pressure on the stock price.
3.4. Evaporation of price premium: competition and market maturity
The early high mNAV premium enjoyed by DATs' stocks stemmed primarily from their scarcity. Before the advent of spot BTC ETFs, companies like MicroStrategy were among the few channels through which large regulated funds could legally gain exposure to BTC. This unique market position generated a significant "scarcity premium."
However, this premium is unsustainable. In addition to the fact that the emergence of ETFs provides a lower-cost, simpler structure, and more risk-free way to invest in digital currencies, the maturity of the market will also allow investors to go beyond the superficial narrative of "increasing holdings of digital currencies" and instead conduct in-depth analysis of its financing mechanism, dilution effect, and leverage risk.
Based on the above analysis, we can conclude that coin-share DATs are highly innovative but extremely risky financial instruments. They successfully build a bridge between traditional capital markets and the emerging world of crypto, but the structure of this bridge is full of inherent contradictions and instability.
Assuming a crash is inevitable, how should investors respond? What strategies should be adopted? What algorithms and criteria should be used? Are there any successful cases in the market? What are their core competitive advantages?
To know what happens next, please listen to the next episode.
