Crypto Treasuries Turn to Emerging Altcoins as Bitcoin's Grip Loosens
For the past year, Bitcoin (BTC) and Ethereum (ETH) have commanded the spotlight for Digital Asset Treasuries (DATs), buoyed by a wave of pro-crypto regulations worldwide. However, a notable shift is underway, as recent reports from Reuters reveal a growing interest in lesser-known altcoins, indicating a strategic pivot within the burgeoning crypto treasury landscape.
A New Frontier Beyond Bitcoin
The number of DAT companies has surged to at least 200, boasting a combined market capitalization of approximately $150 billion – a more than threefold increase from the previous year. While Bitcoin initially anchored these portfolios, its recent struggles are prompting firms to explore new avenues for profit. Many newer companies, often focusing on "penny stock" tokens, are now acquiring diverse digital assets in hopes of achieving greater returns. For instance, companies like Greenland, OceanPal, and Tharimmune have recently announced plans to acquire tokens such as Berachain (BERA), Near Protocol (NEAR), and Canton Coin (CC). Peter Chung, Head of Research at Presto Research, acknowledges that while the initial hype around DATs has diminished, there remains significant potential for a resurgence, particularly as firms look to leverage innovations like artificial intelligence, as cited by an OceanPal representative regarding their NEAR token acquisition.
Navigating the Volatility: Risks and Investor Losses
Despite the allure of higher gains, the move into less popular cryptocurrencies comes with considerable risks. Earlier this year, many DAT companies traded at a premium, with investors betting on their ability to leverage credit for further token acquisitions. However, with Bitcoin's recent instability, some of these firms are faltering. Reports indicate that at least 15 Bitcoin treasury companies were trading below their net asset value as of last Friday, leading to a staggering $17 billion loss for retail investors, according to estimates from Singapore-based 10x Research. Even companies focused on other leading cryptocurrencies are facing headwinds, with ETHZilla and Forward Industries recently resorting to share repurchases to shore up their stock prices. Cristiano Ventricelli, Vice President and Senior Analyst of Digital Assets at Moody’s Ratings, cautions that expanding into "exotic" and less liquid cryptocurrencies significantly heightens risk, especially during market downturns, placing immense pressure on company equity. This sentiment is echoed by Michael O’Rourke, Chief Market Strategist at Jonestrading, who fears many DAT firms may eventually trade at a discount to their underlying digital assets.
