Author: insights4.vc

Compiled by Shaw, Golden Finance

As of August 21st, over $15 billion has been raised by public and private companies for DAT strategies in 2025, surpassing the approximately $6 billion to $8 billion raised in traditional cryptocurrency venture capital equity transactions. This marks a key shift in cryptocurrency capital allocation, with companies moving toward holding cryptocurrencies on their balance sheets rather than backing startups.

DAT Definition – A New Corporate Strategy

A digital asset reserve treasury (DAT) is a corporate entity (typically a publicly traded company with a smaller market capitalization) that primarily raises funds to acquire and hold cryptocurrencies as reserve assets. Unlike exchange-traded funds (ETFs) or mutual funds, these companies hold cryptocurrencies (such as Bitcoin or altcoins) as their primary reserve assets, aiming to benefit from rising cryptocurrency prices and on-chain returns. For example, MicroStrategy (now "Strategy") is the first and largest Bitcoin reserve company, currently holding over 580,000 Bitcoins on its balance sheet.

Non-ETFs – Key Differences

DATs are distinct from passive investment vehicles. They are not spot ETFs, trusts, or hedge funds—there's no mechanism for directly redeeming shares for cryptocurrency—and they often employ strategic initiatives (such as staking, validating, etc.). They are also different from cryptocurrency miners and exchanges, whose cryptocurrency holdings are derived from business operations; nor are they like protocol token reserves or corporate reserves, which contain cryptocurrency purchased with existing cash (rather than raised capital). DATs explicitly raise new capital to purchase cryptocurrency for long-term holding, effectively acting as operating businesses with a cryptocurrency-centric reserve strategy.

Funding trajectory to date in 2025

DAT funding activity accelerated significantly in mid-2025. Monthly DAT funding peaked at approximately $6.2 billion in July, driven by several large transactions in Bitcoin and major altcoins. By August, over 20 public companies had launched DAT strategies, collectively raising over $15 billion. In contrast, venture capital deal volume in traditional cryptocurrencies declined significantly—only 856 startup venture capital deals were completed in the first eight months of 2025, a 56% decrease from 1,933 in the same period of 2024. (Total venture capital investment in US dollars was approximately $8.05 billion, essentially flat with the previous year, but the 2025 figure includes a one-time $2 billion transaction to Binance; excluding this transaction, total venture capital investment was approximately $6.05 billion, a year-over-year decrease of approximately 26%.) This suggests that, at least in the short term, DATs have surpassed venture capital in size as investors reallocate capital.

Drivers – Liquidity, premiums and accounting changes

Several factors are motivating issuers and investors.

1. Instant Liquidity: Investing through a public DAT provides liquidity and mark-to-market pricing, unlike traditional illiquid venture capital.
2. Net Asset Value (NAV) Premium Flywheel: Many DAT shares trade at a premium to the market capitalization (mNAV) of their cryptocurrency holdings. Investors, in effect, pay a premium for immediate investment access. This premium allows DAT companies to issue more shares at inflated valuations to purchase more cryptocurrency, creating a self-reinforcing cycle that drives up per-share NAV.
3. More favorable accounting treatment: U.S. Generally Accepted Accounting Principles (US GAAP) just adopted fair value accounting for cryptocurrencies (FASB ASU 2023-08, effective 2025), meaning companies can mark crypto assets to market on a quarterly basis, with gains/losses recognized in profit or loss. This eliminates the old impairment charge issue and improves profit and loss transparency, giving treasurers greater comfort with their cryptocurrency holdings.
4. ETF Proxies and Strategic Narratives: Some firms position themselves as “operational” alternatives to spot ETFs – offering equity upside, potential technical correlations, and the allure of a “Bitcoin/altcoin strategy” narrative that is sometimes favored by public equity investors, resulting in higher P/E multiples.

Focus on Altcoins: The World Beyond Bitcoin

While Bitcoin remains a top holding in many corporate treasuries, the 2025 boom saw an unexpected shift toward other tokens. Companies targeted high-growth Layer 1 and protocol tokens: for example, decentralized finance exchange Hyperliquid's HYPE token became the second-largest acquisition, with approximately $1.5 billion invested across various DAT treasuries. Others included SUI and SOL, Toncoin (TON), BNB, and Fetch.ai (FET)—often backed or partnered with token foundations. This diversification suggests that companies are seeking high returns (and sometimes profits) from altcoins, not just the stability of "digital gold" like Bitcoin.

Notably, some altcoins’ DAT reserves are arranged with token issuers: for example, US-listed Upexi acquired Solana tokens from investors in the form of notes, while ALT5 Sigma received $750 million of Trump-related WLFI tokens from the Token Foundation as part of a $1.5 billion reserve transaction. These partnerships suggest that foundations are using DATs to bring their tokens to the public market.

Market Size: DAT vs. Crypto VC 2025 to Present

As of August 2025, DAT funding has surpassed traditional cryptocurrency venture capital. Below is a comparison of monthly funding for DAT strategies and non-DAT venture capital in the cryptocurrency/blockchain space:

Monthly Trends (2025)

DAT funding was flat at the beginning of the year but surged in Q2 and Q3, peaking at approximately $6.2 billion in July. In contrast, venture capital (equity investment in cryptocurrency startups, excluding token sales) has been declining every quarter. From April to July, DAT funding significantly outpaced venture capital funding, driven by several large deals. For example, July's total DAT funding of approximately $6.2 billion far exceeded venture capital funding that month (which remained subdued at approximately $1 billion)—suggesting that public capital flowing into the crypto space via DATs far outpaces private venture capital. Through August 2025, DAT funding is expected to remain elevated (already approaching $2-3 billion in the last few weeks, driven by transactions like TON and WLFI), while venture capital funding will not see significant growth.

Year-to-date cumulative total

As of mid-August 2025, companies had raised over $15 billion for DAT initiatives. By comparison, during the same period (January to August), venture capital investment in traditional cryptocurrency startups totaled approximately $6.05 billion (excluding the $2 billion Binance Ecosystem Fund deal). Even with this outlier deal, total venture capital investment is approximately $8.05 billion, still roughly half the amount raised by DATs. In terms of deal count, 856 venture capital deals have been recorded so far this year, with an average deal size of approximately $7 million to $8 million, while DAT funding tends to be one-off, large transactions (several $100 million+ deals). This highlights how a few large reserve fund transactions can shift the balance of funds.

The total impact of a one-time large-scale financing

Notably, both categories have outliers. In venture funding, Binance's $2 billion round (March 2025) drove up the Q1 total. In DAT funding, ALT5 Sigma's $1.5 billion round (August) and Mill City's combined $950 million rounds (July/August) significantly drove up funding totals. Even on a normalized basis, DAT funding now has a slight lead.

Geographical distribution

In 2025, nearly 90% of DAT capital came from US markets (Nasdaq and NYSE American), home to the majority of micro-public companies transitioning to cryptocurrency. Some transactions also occurred in other regions: for example, there was some activity in Canada (Toronto-based Ether Capital increased its ETH reserves, albeit on a smaller scale); similar activity occurred in Asia, such as Hong Kong-listed IVD Medical purchasing $19 million in ETH for its reserves. Overall, however, the US has been the epicenter of DAT fundraising—possibly due to the depth of its capital markets and regulatory arbitrage (US rules permit such transitions with disclosure requirements, while some other jurisdictions may impose stricter regulations or shareholder approval requirements). Direct DAT fundraising in Europe was minimal, in part due to the pending regulatory clarity under MiCA (discussed later), though European venture capital funding for cryptocurrency also declined in the first half of 2025.

Cryptocurrency market impact

The $15 billion in inflows into crypto assets through DATs provided price support and liquidity, particularly for the specific tokens purchased. For example, as of August, Ethereum treasuries held over 3 million ETH, pushing the price above $4,300 (DAT companies held 3.04 million ETH, valued at approximately $13 billion). Similarly, Bitcoin-focused DATs, primarily through ongoing purchases by Strategy, have also added thousands of BTC—Strategy alone purchased approximately 4,020 BTC in May using $427 million from its ATM stock sales. These DAT purchases undoubtedly boosted cryptocurrency prices in 2025, offsetting some of the selling pressure from token distributions by venture capitalists.

Comparison of Venture Capital Deal Portfolio and DAT Deals

In 2025, traditional cryptocurrency venture capital deals have also shifted. Due to a decrease in the number of completed deals (especially at early stages), the distribution of investment stages has shifted more towards later stages—much more venture capital is used to support more mature projects or distressed situations, rather than seed rounds. As of this year, the median deal size for cryptocurrency venture capital has risen to approximately $8 million (approximately $4 million in 2024), with the 75th percentile deal size around $25 million (reflecting some larger Series B and Series C rounds that do occur). Meanwhile, DAT funding has become more binary (for public companies, every funding round is a large one). DAT funds are often immediately invested in liquid tokens, while venture capital funds may remain in the hands of startups for years. This immediacy makes DAT funds appear differently in the market (immediately purchasing tokens on exchanges or over-the-counter platforms) than venture capital (used for salaries, R&D, etc.).

DAT Transaction Segment Analysis

By geographical location

The United States will dominate DAT issuance by 2025. Of the top 20 DAT companies, at least 15 are incorporated in the US and listed on US exchanges (Nasdaq or the New York Stock Exchange). These companies include Strategy, Marathon Digital, Riot Platforms (which maintains Bitcoin reserves as part of its operations), and a new wave of companies turning to cryptocurrency holdings, such as Eyenovia (Hyperion), Lion Group, SharpLink, and Mill City. Despite the complex regulatory environment in the US, there is no explicit prohibition on companies holding cryptocurrencies, allowing these companies to conduct such operations while complying with standard SEC disclosure requirements (while employing fair value accounting).

Asia is the second region: for example, Singapore-based Lion Group Holding (NASDAQ: LGHL) has established its $600 million facility in the US market. Activity in the Hong Kong market has been limited but notable – for example, Hong Kong-listed Upexi (headquartered in the US) has chosen to locate part of its operations in Tampa, Florida, while raising funds in the US; and IVD Medical has directly purchased ETH as part of a strategic investment.

Europe and Beyond: In 2025, few large EU-listed companies held cryptocurrency assets on their balance sheets, likely due to boardroom caution and the upcoming Markets in Crypto-Assets (MiCA) regulation. The only exception was Flow Traders, a smaller Dutch market maker, which reported holding a small amount of cryptocurrency on its balance sheet, but this represented operational liquidity, not capital raised. We anticipate the first true DATs in Europe to emerge in late 2025 or 2026, following the introduction of MiCA regulations, but as of August 2025, the trend remains centered in the US.

By financing tool

DAT issuers have employed a variety of financing vehicles, often tailored to specific circumstances to circumvent shareholder approval triggers and attract investors by offering upside options. A breakdown is as follows (approximate numbers in major transactions):

• PIPE (Private Investment in Private Equity): This is the most common structure—for example, Eyenovia's $50 million PIPE offering convertible preferred stock and warrants, or Verb's $558 million PIPE offering common stock. These transactions are typically conducted at or near the current market price (to satisfy exchange regulations) and include warrants or conversion features to attract investors willing to invest in cryptocurrencies.
• ATM Issuance: Strategy utilizes a continuous, in-market share issuance program. Strategy (MSTR) established a massive $750 million ATM program in 2023 and expanded it in 2025 (even creating new preferred stock classes, STRK and STRF, for Bitcoin-related financings)—selling $427 million worth of shares in a single week in May 2025. ATM issuance allows for a flexible and discreet release of shares to the market, and Strategy has used this method to raise billions of dollars over several years to purchase Bitcoin.
• Registered Direct Offerings and Shelf Offerings: Some companies have filed shelf registration statements and quickly completed large sales. ALT5 Sigma's $750 million registered direct offering (100 million shares at $7.50 per share)—conducted concurrently with a private placement—is an example. Similarly, Mill City Ventures announced its acquisition of Sui after selling 83 million new shares (approximately $450 million) through a registered direct offering.
• Equity placement arrangements: These are arrangements whereby investors commit to purchase a specific amount of stock over a period of time, typically through a standby equity allocation agreement (SEDA). Windtree announced a $500 million equity placement arrangement with one investor (in addition to its initial placement); Mill City also secured a $500 million equity placement arrangement with Alliance Global Partners. These arrangements provide readily available 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 $150 million Solana-backed convertible bond, with a 2% coupon and a 24-month maturity. The bond converted at $4.25 per share (higher than the market price at the time) and, if successful, effectively acted as a deferred equity offering. Investors effectively paid for the bond with SOL tokens (an innovative move). Convertible bonds are attractive because they avoid immediate dilution (no voting shares are issued upfront) and, if priced appropriately, can be designed to avoid triggering Nasdaq's 20% rule. However, they increase leverage and refinancing risk.
• Warrants and subscription rights: Many deals 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)—if its strategy is successful, the warrants could generate over $100 million in future proceeds (but with equity dilution). Warrants are often used to compensate private equity investors for the risk they assume.
• Credit Arrangements and Loans: While less common, Lion Group's $600 million "credit facility" from ATW is essentially a committed loan for the purchase of tokens. The terms are not fully disclosed, but it is likely convertible or secured by tokens. Another example is Marathon Digital's use of a Bitcoin-collateralized term loan in early 2023; however, miners are not included in our definition of DATs. These debt-based approaches are attractive when companies want to avoid immediate dilution or project token returns high enough to easily cover interest.

By investor type

The investor base for DAT transactions bridges traditional finance and crypto-native companies. We observe four main investor types:

• Cryptocurrency-focused venture capital and hedge funds: Firms like Pantera, Polychain, Paradigm, Galaxy, and Electric Capital have all participated in DAT transactions (e.g., Pantera invested in SUI, Galaxy invested in Mill City, and DCG has some BTC investments through its affiliates). These investors understand token economics and often seek board seats or advisory roles (e.g., Pantera's Cosmo Jiang frequently comments on DAT strategy).
• Cross-border investors and traditional venture capital firms: Both tech-savvy investment firms (such as Ribbit Capital, which has led multiple fintech funding rounds and participated in Verb's TON deal) and growth equity funds (ATW Partners has participated in multiple deals) are involved. They are attracted by the perspective of "high-growth assets on public platforms."
• Token Issuers and Affiliates: In some cases, the token issuer or foundation itself is a participant. The Hyperliquid Foundation may have facilitated the HYPE issuance (in kind, through in-kind support, technical integration, etc.). Binance affiliates (Build and Build Corp) invested $60 million directly in Windtree and have agreed to additional investments—effectively injecting capital into the BNB public investment vehicle. The Sui Foundation has a "strategic relationship" with Mill City, suggesting support (perhaps with priority token allocations).
• Family offices and high-net-worth investors: Some deals, notably Verb's TON, have attracted family offices like Vy Capital (with ties to Telegram) and Kingsway's LPs, as well as crypto whales (media reports indicate that "several prominent cryptocurrency founders" have invested in TON Strategy Co.). These investors view DATs as quasi-index bets on a particular cryptocurrency ecosystem. They typically invest through private placements to gain exposure to equity that may become liquid in the future.

Investment scale and participation

Venture capital funds typically invest medium-sized funds ($5 million to $50 million) in these structures—for example, Pantera reportedly invested approximately $20 million to $30 million in Mill City (based on an $83 million stake allocated across four funds). In the Verb deal, Kingsway led the large round (rumored to be north of $50 million), while major investors like Blockchain.com and Ribbit likely each invested $20 million to $40 million. Over 100 other investors participated in smaller rounds (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, World Liberty's founders exchanged WLFI tokens for equity value in ALT5 Sigma. Notably, some VC funds use their "liquid" capital (hedge funds or crossover vehicles) to participate in DATs, rather than their core, illiquid VC funds—this allows them to trade or hedge. For example, Hack VC admitted to investing idle cash in DAT shares for yield. Hack VC's Ed Roman stated that they view DATs as temporary cryptocurrency exposure until they find the right startup deal. This suggests that some participation may be short-term or opportunistic. On the other hand, others, such as Neoclassic's Michael Bucella, have stated that they expect to hold until the market revalues these vehicles (and are eyeing exit opportunities when the NAV premium compresses). In terms of the investment vehicles used, VC and hedge fund investors typically acquire equity directly through PIPEs (often receiving restricted or preferred stock that is later registered). Minority investors who own multiple LPs participate through a special purpose vehicle (SPV)—for example, an SPV might be set up to invest in a specific DAT and be responsible for ultimately distributing shares or sale proceeds to the LPs.

Impact on venture capital allocation

These flows clearly demonstrate a shift in capital: funds that could have funded 10 startups are instead flowing into the token reserves of a single public company. Investors reasoned that they could gain liquidity, mark-to-market gains, and potential gains from a premium if the token price rose. However, this raises concerns: if $3 billion to $5 billion in venture-style funding flows into DATs by 2025, there will be significantly less capital available to fund new Web3 infrastructure or decentralized applications. Some venture capital partners have expressed concerns that DATs are crowding out innovation funding. In Section 5 (Analytical Questions), we will revisit this issue and attempt to quantify this crowding-out effect by investor type (for example, how much of Paradigm's new investments are going to DATs rather than startups).

Event Studies: Stock Price Reactions and Abnormal Returns

We analyzed the stock price performance of publicly traded DAT issuers around key events, specifically, the announcement of their financial strategy and, where applicable, the subsequent disclosure of their cryptoasset purchases. Our event study covers approximately 12 companies and calculates the cumulative abnormal return (CAR) over two time periods: Day 0 (the announcement date) and the five trading days following the announcement, as well as around the significant deployment date (when the company confirms its cryptoasset purchase).

Here is a summary of our findings:

The initial market reaction to DAT announcements was generally very positive, reflecting both surprise and speculative enthusiasm. On average, stocks in our sample rose 38% on the day of the announcement (with a median of approximately 20%), significantly outperforming the broader market. (Our benchmark, the Russell 2000 Index, was flat or up only about 1% on the day of the announcement, so these are truly abnormal returns.)

For example:

• Lion Group (LGHL): On June 19, 2025, the company announced a $600 million Hyperliquid token reserve, resulting in a 19.6% increase. The stock price rose from approximately $2.80 to $3.35, with trading volume reaching 50 times its normal level. The CAR over the following five days was approximately +15%, though some of this was reversed as traders took profits.
• Eyenovia (EYEN): This stock is interesting—on June 17, 2025, the company announced a $50 million HYPE token strategy, priced at $3.25 per share. Prior to the announcement, the stock closed around $1.40. EYEN initially surged over 100% in after-hours and pre-market trading (reports indicate a 134% intraday increase). However, by the next full trading day (June 18), it opened at approximately $2.70 and closed at approximately $2.10, a net increase of 50% from pre-announcement levels. The stock has been volatile: A report from AInvest indicates that the stock fell 24% pre-market on June 19, likely due to the excessive price increase followed by a correction. Despite this, Eyenovia's CAR (0, +5) remains approximately 40%. Investors were excited about the potential gains from cryptocurrency and the significant capital infusion for a small biotech company, but concerns about equity dilution limited gains.
• Verb Technology (VERB): On August 4, 2025, Verb announced the acquisition of TON for $558 million and a rebranding. The stock, previously trading at approximately $2, surged to approximately $6 (over 200%) at its intraday high on August 4th, on heavy trading volume. It closed the day up approximately 120%. However, the stock price retreated significantly the following day, with a cumulative gain of approximately 50% over five days. This substantial transaction (relative to Verb's pre-announcement market capitalization of less than $50 million) implied significant equity dilution, limiting any further upside in the stock price.
• Mill City (MCVT): On July 24, 2025, the company's first $450 million SUI transaction was announced, and its stock price surged from approximately $1.85 to $5.00 (+170%) within a few days. Specifically, the stock price rose 82% on the first day, and within a week, it gained 165%. Notably, upon the announcement of its second $500 million financing round on August 2, the stock price fell 11% that day, suggesting that subsequent financing rounds may be viewed negatively by the market (due to equity dilution) once the financial strategy shift becomes known.
• Windtree (WINT): Following the announcement of the BNB strategy on July 16, 2025, WINT rallied 32% in two days (from approximately $0.50 to approximately $0.70), but by the fifth day, it had begun to decline again (up approximately 10%). In Windtree's case, initial excitement almost immediately gave way to selling pressure as savvy investors expressed skepticism about its execution. In fact, within a month, WINT had fallen over 90% from its peak, an unusual plunge we will discuss separately.

In general, the initial announcement of a shift in cryptocurrency reserve strategy typically leads to a strong, positive stock re-rating. Small-cap traders often flock to the stock, viewing it almost as a proxy for the underlying token or the next "cryptocurrency opportunity." The presence of a large-scale fundraising round (e.g., "$X million secured to purchase cryptocurrency") is crucial, demonstrating credibility (someone is funding this) and the likelihood of significant buying. These "zero-day" reactions underscore the transformative nature of such events in the market's eyes.

Stock price fluctuations after the announcement

Following their surge, DATs experienced mixed performance. Many DAT stocks experienced high volatility and some mean reversion after their initial surge. Over a five-day window starting on Day 0, we observed an average cumulative excess return (CAR) of 25%, down from an average of 38% on Day 1, suggesting some gains were retraced. For example, Lion Group retained most of its gains (a five-day CAR of 15%), while Eyenovia turned negative within five days of the announcement (early buyers sold off, resulting in a cumulative CAR of approximately -20% by Day 5, from the initial surge). The variation was significant: some stocks continued to rise (Mill City's continued gains continued throughout the week as more investors learned of the news, ultimately rising 165% in a week), while others quickly reversed course (Windtree's gains evaporated within 10 days).

Statistical analysis suggests profit-taking and valuation reality checks are beginning to appear. Furthermore, short sellers appear to be emerging—for example, after Verb's stock price surged, short selling interest surged as traders bet on a share price pullback due to impending equity dilution. "Buy the rumor, sell the fact" plays out in practice: Another event is when a company actually executes a cryptocurrency purchase and discloses it (via a Form 8-K or press release). Typically, by the time the purchase is made, the stock reaction is muted or even negative—perhaps the market has already priced in the news, or the token's price movement has impacted the stock. Case study: MicroStrategy's stock price has historically moved positively when it announced multiple incremental Bitcoin purchases; however, in 2025, its correlation with Bitcoin meant that if Bitcoin fell on the news, MSTR would also fall. (For example, during one of its Q1 2025 purchase updates, Bitcoin fell from its high, and MSTR stock fell approximately 8% that day, roughly matching Bitcoin's decline and not an "abnormal" drop beyond its beta coefficient.)

• Regarding altcoin-focused DATs: SharpLink announced on August 5th that it had purchased an additional 83,562 ETH (valued at $264.5 million); interestingly, ETH prices fell off their highs that day, and Sharplink's stock price fell approximately 10% following the announcement. This may be a "sell on the news" reaction following a stock price rally. Similarly, BitMine Immersion announced a significant purchase of 208,000 ETH on August 7th, and its stock price also fell approximately 7% due to the decline in ETH prices (BitMine's announcement came during a general cryptocurrency correction). Windtree has never announced a completed large purchase—the closest it has come was the disclosure of its $60 million BNB purchase agreement; since then, the stock has briefly risen before continuing to decline, thus lacking any positive momentum. A clear pattern is that DAT stocks generally rise more when the underlying cryptocurrency rises, and vice versa. These stocks have higher asset betas. For example, in mid-August, when Bitcoin rallied on rumors of an ETF, Strategy's stock price rose approximately 15% in a single day (beta > 1). In late June, the HYPE token fell approximately 20% (from $45 to $36) after the initial hype, and Eyenovia's stock price also fell by approximately 25%. Therefore, event studies must control for the volatility of the underlying token to isolate abnormal returns. Our analysis achieves this by regressing stock returns on token returns before and after the event. In many cases, the initial announcement had a much larger impact than the token's beta would predict (because tokens had not yet been purchased). However, after the funding pool was in place, stock movements and token performance became highly correlated (i.e., announcements of further token purchases were no longer significant surprises but simply increased token exposure).
• Long-term Performance: It's too early to draw conclusions, but looking at the performance of these stocks so far this quarter, most have outperformed broad cryptocurrency stock indices (such as the Galaxy Crypto Index) since their transformations. For example, Lion Group gained approximately 150% from pre-transformation to late August, outperforming many cryptocurrency mining stocks. Mill City is up approximately 165% since July 1st. SharpLink (which transformed in June) rose from approximately $4 to $12 in early August (a 200% increase), though with significant volatility. Windtree, on the other hand, has seen near-total losses (down 95%) for those who bought during the transformation rally. Eyenovia has been roughly flat to slightly higher since pre-transformation (from $1.50 to around $1.80)—it had a significant run-up but then retreated. Strategy, while not a 2025 transformation (it's a traditional case), has gained approximately 120% so far in 2025, in line with Bitcoin's bull run (and benefiting from the elimination of accounting headwinds).
• Abnormal Returns After Capital Invested: We also examine whether there are any biases in capital invested in cryptocurrencies during the 5-day window following the announcement of “buying X bitcoins at price Y.” In theory, one might expect any remaining discount to NAV to narrow or widen once cryptocurrencies appear on the balance sheet.

Our findings

There are no persistent positive abnormal returns following deployment; if there are any, there is only slight underperformance. This suggests that the main stock price increases occur before or in anticipation of purchases (premiums form in anticipation), and once the cash pool fills up, arbitrageurs or risk aversion may step in. For example, Genius Group announced on July 20 that its reserves had exceeded 100 bitcoins—its stock did not fluctuate much on this particular announcement because it was known that they were buying. Announcements of monthly bitcoin production at Marathon Digital or Hut 8 could lead to small stock price increases if they are positive, but these would be operational rather than related to capital raising.

Market Efficiency and Speculation

This event study reveals both market inefficiencies (initial overreaction due to hype) and eventual arbitrage (the convergence of stock prices with fundamentals/token value). In the case of Windtree, the market may have initially misinterpreted this turning point as positive, but it quickly corrected as underlying issues such as compliance issues and equity dilution emerged. In cases like Verb or Eyenovia, the market struggled to assess the relationship between significant equity dilution and asset appreciation, leading to significant stock price volatility.

Post-event bias associated with premiums

We found an interesting correlation: stocks that quickly rose to very high mNAV premiums (e.g., >1.3x NAV) tended to subsequently underperform (mean reversion), while those that remained near or at a modest premium to NAV performed more consistently post-event.

This suggests that the presence of arbitrage funds and rational investors has limited excessive enthusiasm: for example, if a stock trades at 1.5 times the value of its cryptocurrency, short sellers will step in. In July, some hedge funds reportedly shorted BitMine and SharpLink as their premiums surged, offsetting their losses by going long on ETH—effectively betting that the premiums would fall. By mid-August, BitMine's premium had indeed fallen slightly, as had SharpLink's. Lion Group, in contrast, didn't immediately experience a wild premium (partly because its transaction wasn't all equity—it was a loan arrangement), and its gains have therefore held up better.

Market Net Asset Value (mNAV) and Price Premium/Discount Analysis

DAT stocks often trade at a discrepancy 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 that influence these gaps.

• Prevailing Premiums in 2025: As of August, most active DATs traded at a premium to net asset value (NAV). Strategy (MSTR) trades at a 10%-15% premium to its Bitcoin holdings, in part because its value is priced in the alternative value of liquid BTC. Among Ethereum investment vehicles, SharpLink trades at a ~18% premium to NAV, and BitMine Immersion at ~14%. Newer entrants like Mill City briefly traded at around 1.2x NAV before gradually approaching parity. Lion Group's share price rose 20% after its initial $10 million purchase, reflecting expectations of NAV growth rather than current holdings.
• Discounted Trading Examples: A few stocks trade at significant discounts. Ether Machine (DYMX) holds approximately $1.27 billion in ETH, but has a market capitalization of only approximately $177 million (an 86% discount), likely due to its structure and potential selling pressure. BTCS trades at a discount of approximately 24% to its net asset value due to governance and liquidity issues. Windtree also traded well below its implied cash value before delisting, as investors expressed skepticism about the transaction's completion.
• Dynamics over time: Premiums peak at announcements due to market excitement and uninvested NAV, then compress as assets are acquired. SharpLink fell from approximately 1.3x NAV to approximately 1.1x to 1.2x NAV within a few weeks. Strategy premiums typically widen during bull markets (up to 1.5x) but shift to discounts during market downturns. The precedent for GBTC (from a 40% premium to a 40% discount) highlights the risk of market sentiment.
• Market Outlook: Experts anticipate price parity. Pantera and Hypersphere predict that most DATs will be priced at or below their net asset value (NAV), with only leading institutions (DAT reserves in BTC and ETH) maintaining a slight premium. By 2026, Bitcoin DAT prices are projected to reach nearly 1.05x, and Ethereum prices to reach around 1.10x, while smaller institutions will face discounts or be forced to merge.
• Mechanism and Governance: Unlike ETFs, DATs lack a redemption mechanism, so price differentials can only be offset through issuance, repurchase, or arbitrage. Issuing shares at a premium (e.g., MSTR) can increase net asset value, but carries the risk of excessive premiums; repurchases are rare due to insider control. Hedge funds may short DATs when they are trading at a premium and go long when cryptocurrencies rise, although the borrowed funds are typically minimal. Some companies use structured financing (e.g., Upexi's SOL notes) or lock-up mechanisms to stabilize value. Governance quality, transparency, and audits also influence whether a company trades at a premium or discount.
• Similarities to closed-end funds: DATs are similar to closed-end funds and can trade at significant discounts in a bear market due to the lack of redemptions. Large investors may eventually exploit these extreme discounts through acquisitions.

Capital Flows and Investor Participation

A wide range of capital is pouring into DATs’ balance sheets, encompassing crypto-native institutions, Wall Street crossover players, 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 rounds, often from more liquid side pockets rather than 10-year funds. Pantera's stake in Mill City is around $50 million; Paradigm's stake easily exceeds $20 million.

2. Hedge Funds and Cross-Border Traders

Galaxy Digital, Brevan Howard Digital, Point72 Crypto, Jump, and DWF Labs are using DATs as liquidity trading platforms. Trading amounts range from $10 million to $55 million, often in conjunction with token liquidity or hedging.

3. Token Foundation and Affiliates

Binance's Build and Build Corp. invested $80 million in Windtree's BNB project. TON Foundation leadership injected capital into Verb, while the Sui Foundation partnered with Mill City. This support typically takes 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 see DATs as growth equity combined with public market upside. Kingsway's lead investment in Verb may have exceeded $50 million. Wealthy cryptocurrency founders are also jumping at the chance to invest.

5. Strategic Crypto Company

Exchanges and custodians purchase small equity stakes to lock in service relationships. Examples include clients of Blockchain.com, Kraken Ventures, BitGo, and Coinbase Custody. Typical transaction volumes range from millions to tens of millions.

How do they invest?

Almost all investments are made through private placements of common or preferred stock, PIPE notes, or warrants. Some institutions negotiate token allocations, but most rely on the company to hold reserves.

Market impact

The influx of funds into DATs coincides with a significant decline in seed funding, while overall cryptocurrency venture capital investment has remained stable. Investors like Hack VC view DATs as a place to park liquidity until high-quality early-stage startups emerge, but if DATs continue to outperform, they could permanently divert funds away from early-stage projects.

in conclusion

As of August 21, 2025, DAT funding has surpassed traditional cryptocurrency venture capital, having raised over $15 billion, compared to approximately $6 billion to $8 billion for venture capital, signaling a clear shift in venture capital toward on-balance sheet exposure. This growth has been driven by public market liquidity, a premium to net asset value that reduces the cost of capital, and fair value accounting, although these supporting factors are cyclical and may diminish.

DAT stocks carry elevated risks, including dilution and leverage, thin trading and custody, concentration in a single token, and an evolving regulatory environment. In the short term, DAT flows appear to be crowding out some early-stage funding and supporting token prices; if ETF access expands, DAT premiums and differentiation may weaken. Executives should view DATs as opportunistic liquidity exposure and implement strong governance, fundraising discipline, and NAV price monitoring, while preparing for a period of competition between DATs and startups for funding.