The market turmoil in October led to a significant decline in the value of assets managed by Digital Asset Treasury Companies (DATs), resulting in extensive losses.
While some altcoins have seen a rebound, it has not been enough to recover from prior losses, increasing uncertainty around future accumulation strategies. What are the financial struggles of various DATs, and how are they responding? The following examination offers greater insight.
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ETH, SOL, TON, and WLFI Treasuries Endure Losses in October
The trend for DATs was initially sparked by the success of companies like MicroStrategy (now rebranded as Strategy) with Bitcoin. However, it has since broadened to include altcoins in anticipation of ETF approvals, institutional investments, and a decline in Bitcoin’s market dominance.
These firms are utilizing market capitalization to gather digital assets, encompassing Bitcoin and altcoins such as ETH, SOL, WLFI, XRP, BNB, and others.
Based on CoinGecko data from October, numerous DATs have reported significant losses:
- BitMine Immersion (BMNR): On October 13, the firm reported holdings of 3,032,188 ETH at an average acquisition price of $4,154 per ETH. With ETH trading below $4,000 currently, BMNR faces an unrealized loss of nearly 4%.
- Forward Industries (FORD): This company possesses the largest Solana (SOL) treasury, holding 6,822,000 SOL—equating to 1.248% of the total supply. With an average purchase cost of $232, FORD’s unrealized losses surpass $245 million, or approximately -15.5%.
- AlphaTON Capital (ATON): The company acquired 11.28 million TON, accounting for 0.448% of total supply, at a cost of $30 million. The current valuation of its TON holdings stands at $24.87 million, indicating a loss of $5.13 million.
- ALT5 Sigma (ALTS): The organization is also experiencing a loss of nearly $300 million after accumulating more than $1.3 billion worth of WLFI, which is now valued at only $1 billion.
- Other entities, such as Bit Origin, have sustained approximately $2 million in losses from their DOGE treasury, while Pineapple Financial documented a $2.7 million loss on its INJ assets.
Numerous companies acquired XRP during July and August. They too may be experiencing losses, as XRP’s value is now lower than it was two months prior. However, precise evaluations remain elusive due to the lack of public disclosure regarding their average procurement costs and total holdings.
All these losses are unrealized, suggesting that the DATs have the potential to recover if altcoin prices increase soon. Nevertheless, the recent market descent makes such an outcome increasingly uncertain.
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Possible Consequences as DATs Encounter Losses
When altcoin values dip below the average acquisition cost, companies may face serious financial difficulties.
Should the market fail to recover by year-end, these companies will be compelled to report losses in their quarterly financial documents, which will diminish profits or plunge them into net losses.
A significant number of DATs also employ debt instruments—such as convertible debt or credit facilities—to finance altcoin acquisitions. A steep drop in asset values could trigger margin calls, necessitating sales at reduced prices. These sell-offs would create realized losses and diminish liquidity.
Additionally, there may be a decline in shareholder confidence, leading to a substantial fall in stock prices. If share values approach or dip below the company’s net asset value (NAV), management may feel obliged to liquidate altcoin assets to settle debts or finance share buybacks. Such actions could further suppress altcoin prices, initiating a downward spiral.
Analyst Joe Carlasare recognized that investors in these treasury firms are currently at a loss, describing the DAT model as a failed experiment rather than a fraudulent one.
As October progresses, the DAT trend seems to be slowing down. Heightened macroeconomic concerns and renewed tariff pressures appear to be causing more firms to hesitate before embracing the trend.
