A recent report discussed how Digital Asset Treasury (DAT) companies like BitMine and Strategy are sitting on billions of dollars of unrealized profits as Ethereum (ETH) and Bitcoin (BTC) lose crucial support levels.
“Bitmine is now down more than $1,000 per ETH, implying about $3.7 billion in unrealized losses before even accounting for the hefty NAV [net asset value] premium public-market investors paid on top,” the report highlighted.
When NAV rises, “old” shareholders benefit; when it falls, the damage compounds, a dynamic DAT investors often underestimate. When the premium inevitably shrinks to zero, as it is doing now, investors find themselves trapped in the structure, unable to get out without significant damage, a true Hotel California scenario.
Unlike Exchange-Traded Funds (ETFs), Digital Asset Treasuries “layer on complex, opaque, and often hedge-fund-like fee structures that can quietly erode returns,” the report added, noting that many investors are unaware that DATs embedded costs “far exceed” the management fee charged by asset managers like BlackRock on its Bitcoin (BTC) and ETH ETFs.
Moreover, 10x Research argued that with the potential introduction of a staked Ethereum ETF by BlackRock, “the economics of DATs are likely to face increasing scrutiny” as retail investors reallocate to a low-cost source of yield.
In its November Chairman’s Message, Thomas ‘Tom’ Lee, noted that the crypto market prices have not recovered from the October 10 liquidation event, and “the lingering weakness has the hallmarks of a market maker (or two) suffering from a crippled balance sheet.”
Crypto suffered from that liquidation event on October 10th, but because the fundamental story is intact and crypto discounts the future, that’s why it’s volatile, but it still looks pretty attractive here.
As of this writing, Ethereum is trading at $2,840, a 29% decline in the monthly timeframe.
