A Quick Digest Of The Last Few Weeks
The last few weeks were quiet, at least from a price standpoint, which gave every digital assets prognosticator a chance to release their 2026 predictions (ourselves included). In some ways, nothing has changed since the end of the year. The majority of the crypto market remains rangebound, with increasing confidence that a bottom has formed for certain large-cap “benchmark” assets; however, there are few catalysts on the horizon to snap the market completely out of its funk. A general lack of interest in trading over the holidays has yet to fully subside, with trading volumes remaining low. And I’m still feuding with Coinbase, pleading that they stop treating their customers like braindead robots (fwiw – these pleas do work, as both CoinGecko and CoinMarketCap made changes at our behest).
But in other ways, a lot has changed. More Wall Street incumbents have announced blockchain and crypto trading initiatives; MSCI delayed a ruling, thus keeping MicroStrategy (MSTR) and other DATs in their indices for the time being; the White House is preparing for midterms by announcing a series of consumer friendly events (tax cuts, credit card rate reductions, and mortgage sweeteners); the Senate Banking Committee has scheduled a key meeting for Thursday this week to vote on the proposed crypto market structure bill; Bitcoin is back in the spotlight as a credibly neutral, predictable, transparent, and censorship-resistant monetary policy after the U.S. government captured Venezuelan President Nicolás Maduro; and lastly, the DOJ has opened a criminal investigation into Fed Chairman Powell.
Last year, AI agents took the market by storm in January, followed by the launch of the TRUMP memecoin, which disrupted market momentum. This was followed by a 6-month rally led by revenue-producing tokens with buybacks, then the DAT craze, and ultimately a flash crash that coincided with a rise in privacy coins. Few, if any, of these market-moving events were priced in or expected at the beginning of the year.
As we look ahead to 2026, most predictions will again prove wildly wrong, but they do offer a glimpse into real-time positioning. Most have given up completely on DATs, have tired of token/equity cap structure splits, have given up on Bitcoin relative to gold/silver, and are looking for the next big thing to completely replace the old thing (i.e., Canton, or Tempo, or Stripe).
I don't have any significant insights regarding Bitcoin. My opinion remains unchanged that BTC is more akin to a credit-default swap on the continued failures of local governments, currencies, and banks, and will experience spurts of strength whenever the market loses confidence in these entities. Since I’ve spoken at length over the years about how tokens and equity fit in a capital structure, I won’t belabor that point today.
But I do have a new opinion on DATs.
How to Think About Digital Asset Treasury (DAT) Companies in 2026
Cantor Fitzgerald recently initiated coverage on a few off-the-run DATs (for example, this recent report on PURR and HYPD – two DATs that invest solely in Hyperliquid’s HYPE token). This is probably the best and most detailed Wall Street report on an individual token ever, and it would never have happened if not for DATs. At this point, perhaps the only good thing about DATs is that Wall Street can make money trading and banking the stocks, which means you can get some actual research coverage, and potentially attract new investor interest in the stock (and thus, the token).
More broadly, DATs simply accentuate a fact that we already knew. Equity shells attract more investors than tokens. There is still no natural buyer base for tokens other than retail and a few small funds, whereas equity investors remain plentiful across both retail and institutional channels. Now, a token does not become more valuable just because it is wrapped in a stock wrapper - no different than how an ETF wrapper doesn’t guarantee demand for the underlying asset. But if a token is already valuable, or can become more valuable by morphing / evolving over time, the ability to buy this token via an equity shell is likely more attractive to many investors than the token itself. In our opinion, tokens are more flexible vehicles for capturing value (financial, utility, and social) than stocks or bonds. However, if it takes wrapping these assets in a stock to find permanent capital buyers, then so be it.
Now, the DAT has a dual mandate:
Ultimately, the success of the DAT comes down to whether or not the underlying asset is (or can be) valuable, and whether the manager of the DAT has the ability to add value to both the underlying asset and the DAT itself.
But the majority of these DATs can’t control the underlying asset, and that’s why they are doomed. If your entire business model is to accumulate a good asset, but you can’t control the value of the asset that you are accumulating, then it’s not a very sound business model. Recall, six months ago, I said that investment bankers, sponsors, and existing shell shareholders were the only ones who would make money on DATs – and that new investors would likely make nothing. That has been pretty accurate.
To change this dynamic, the DAT market needs to take a different approach.
Typically, companies create or produce an asset or a good that they control and sell. Think iPhones or candy bars, or widgets. Because the company has control of the asset it produces, it can tweak it to make it better and sell it for more money. The company controls the quality and the quantity of the asset. DATs, on the other hand, have only been buying assets that they do NOT control and therefore, can't make the underlying asset better. Strategy (MSTR) can’t make BTC better. Bitmine (BMNR) can’t make ETH better. Forward (FWDI) can’t make SOL better. Simply buying an asset and talking about it relentlessly doesn’t improve the asset.
A better DAT would have a private equity mindset. A company should try to buy an asset, and simultaneously make that asset better under the DAT's ownership in the same way that a private equity company buys a company, makes it better, and sells it back out at a higher price. Regardless of whether you produce and sell an asset or buy and improve an asset, the value of a company can only grow as demand for those underlying assets grows. So you have to make the underlying asset better under your watch.
If you don't help to increase the value of the token, your DAT will fail. And as you can see below, most are now failing.
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So I’d expect the DAT market in 2026 to be less hype-man and more fix-it-man. And Arca is already in the process of working with some companies on how to fix their token via better tokenomics and token design.
Alternatively, for those DATs that can’t control the underlying asset, they will have to find other businesses that actually make money to support the buying of the tokens. Strategy (MSTR) started with a software business that had positive EBITDA, but somewhere along the way, investment bankers convinced investors that “clean shells” were a better approach. Intuitively, this made no sense. Why take a broken business with no revenue and earnings and turn it into a vehicle that only raises money via equity and debt markets to buy an asset?
A better equity shell, one with a real underlying business, can support significantly more debt and interest payments than a pure-play, “clean” shell.
For example, Grayscale filed an S-1 a few months ago and will likely be trying to IPO in 2026. While most will focus on Grayscale’s asset management business, perhaps a better way to view GRAY will be as a DAT Plus! Grayscale may, in fact, become the best DAT structure ever created. The market just doesn’t know it yet.
Instead of reverse mergers into dead public shells, Grayscale will IPO with a massively profitable (but slowing) business. Think of Grayscale similar to the Yellow Pages businesses back when they were clearly dying, but they still spun off tremendous free cash flow for decades while in decline. The profits Grayscale receives from the management fees of their assets are paid in kind (in BTC, ETH, etc.), so they can build a massive crypto DAT warship and don’t have to rely on external funding to do it. At current AUM, Grayscale is accumulating somewhere around $250-350 million per year in revenue via tokens. That’s a much more sustainable way to build a DAT than being reliant on equity and debt financing.
Other DATs that rely on a premium to NAV to grow via capital markets financing are probably never going to buy more of the underlying asset ever again because they can’t sell more shares or issue more debt with no underlying business model and a stock that trades below NAV.
Grayscale, on the other hand, will add $250 million+ of crypto to its balance sheet every year from organic free cash flow, without having to tap the markets at all. And they can support debt if they choose to, due to the high cash flows of the business (strong interest coverage ratio).
This is how DATs should be structured going forward. Use a cash flow-generative business to buy underlying crypto assets.
