Throughout the past year, Bitcoin (BTC) and Ethereum (ETH) have emerged as the primary focus for a growing trend of Digital Asset Treasuries (DATs), particularly driven by favorable pro-crypto regulations worldwide. However, recent reports from Reuters indicate that this focus is beginning to shift towards less popular altcoins.
New companies are launching daily, many of which are penny stocks looking for avenues to enhance profits. Yet, as Bitcoin’s value declines, these firms are increasingly turning to new tokens in hopes of achieving greater returns.
In recent weeks, companies such as Greenlane, OceanPal, and Tharimmune have announced plans to acquire tokens like Berachain (BERA), Near protocol (NEAR), and Canton Coin (CC), respectively.
Peter Chung, head of research at crypto-focused Presto Research, noted that while the initial hype surrounding DATs has diminished, there remains potential for a resurgence.
Earlier in the year, many digital asset treasury companies traded at a premium to their crypto holdings as investors believed these firms could leverage credit to acquire more tokens.
Retail investors, significant buyers of high-profile Bitcoin treasury companies, reportedly lost around $17 billion on these trades, according to estimates from Singapore-based 10x Research.
Despite the potential for higher gains, analysts warn of the risks associated with this strategy. Cristiano Ventricelli, vice president and senior analyst of digital assets at Moody’s Ratings, cautioned that expanding into “exotic” and less liquid cryptocurrencies could significantly heighten risk.
According to Ventricelli, when market conditions worsen, companies that invest in these assets face greater pressure on their equity.
Michael O’Rourke, chief market strategist at JonesTrading, also expressed concern that most digital asset treasury companies may ultimately trade at a discount to their digital assets.
Featured image from DALL-E, chart from TradingView.com
