According to Coinbase’s head of investment research, David Duong, digital asset treasury companies will likely consolidate under a few larger entities as the cycle matures and firms strive to attract investors.
In a conversation with Cointelegraph, Duong mentioned that aside from strategies aimed at improving share prices, “companies may begin to pursue mergers and acquisitions, similar to the recent Strive and Semler Scientific deal, as we move toward the more mature stages of the DAT cycle.”
Strive, an asset manager turned Bitcoin treasury company, revealed on Sept. 22 that it was acquiring Semler Scientific in a deal involving all stock.
Simultaneously, Duong noted that DATs are exploring more crypto-native strategies, such as generating yields through staking or DeFi looping, which involves borrowing and repositioning the same asset repeatedly to enhance returns.
“There’s still much more they can do. The future will largely depend on what unfolds with regulatory shifts, liquidity, and market pressures to gain clearer insights into the long-term direction.”
On Sept. 15, Standard Chartered forecasted that not all DATs will endure in the long run, compelling them to adopt new strategies or fade into obscurity.
Crypto treasuries aiming for dominance over a single token
Duong and fellow Coinbase researcher Colin Basco stated in a Sept. 10 report that the DAT race has evolved into a player-vs-player phase, with firms striving to distinguish themselves from their competitors.
Duong remarked that recent share buybacks by crypto treasury firms in the preceding weeks stem from this new phase.
Media company Thumzup, linked to Trump Jr., which holds Bitcoin (BTC) and Dogecoin (DOGE), announced on Sept. 24 that it was boosting its share buyback from $1 million to $10 million. Additionally, Solana (SOL) treasury firm DeFi Development Corp also expanded its share repurchase from $1 million to $100 million.
“I believe this stems from the notion that only a select few major players will dominate each token, and they are vying to set themselves apart through either scale or financial engineering,” Duong stated.
“I also believe this strategy likely led to the negative price behavior observed in mid-to-late September, as entities prioritized capital use to enhance stock prices over accruing cryptocurrency.”
Many DATs have faced challenges in maintaining share prices, with some experiencing declines of up to 90%, attributed to market saturation and investor concerns regarding sustainability.
Share buybacks don’t guarantee success
Duong also noted that, based on his experience, share buybacks might not always lead to a price increase, especially when the market interprets the action as a negative indicator regarding the company’s long-term viability, since it is fundamentally “very much sentiment-driven.”
Related: Crypto treasuries risk 50% downside on PIPE selling pressure
“The effectiveness of buybacks depends on investors’ perceptions of the company’s fundamental health,” he remarked.
“For example, if a DAT is employing buybacks as a defensive strategy to decrease its float, but the market believes the company has an effective capital allocation strategy and maintains transparency, then its share price might benefit. Conversely, the opposite may be true when conditions aren’t favorable.”
TON Strategy Company, formerly known as Verb Technology Company, announced a stock buyback on Sept. 12, but the market reacted unfavorably, with shares declining 7.5%.
DATs have accumulated substantial assets
DATs that have incorporated Bitcoin into their balance sheets hold over 1.4 million coins, representing 6.6% of the total supply, valued at over $166 billion.
In addition, 68 companies have acquired a total of 5.49 million Ether, valued at over $24 billion. Simultaneously, Solana has also seen significant acquisition, with nine publicly tracked entities holding more than 13.4 million tokens, valued at over $3 billion.
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