CMC News

Most #Crypto Treasuries Will Trade Below Holdings, Bitwise Says

Bitwise Chief Investment Officer Matt Hougan argues that most digital asset treasury companies will trade below their cryptocurrency holdings. He attributes this to structural factors that outweigh the limited methods firms have to increase their crypto-per-share value.

Hougan outlined a framework treating DATs as finite entities subject to predictable downward price pressures. He identified illiquidity, operating expenses, and execution risk as certain forces pulling valuations below underlying #cryptocurrency holdings.

The #illiquidity discount stems from delayed access to assets. Hougan questioned why investors would pay full price today for $BTC they would receive in a year, noting that gaps between ownership and delivery create automatic markdowns.

Operating expenses directly reduce shareholder value according to Hougan's analysis. Every dollar spent on executive compensation or business operations comes from investor pockets, creating an ongoing drag on the company's net asset value.

Execution risk adds another layer of discount as investors price in the probability of operational mistakes. Hougan stated that firms must overcome these structural disadvantages before any premium to holdings becomes justifiable.

Only four primary strategies can offset the baseline discount: issuing debt, lending tokens, using options, and buying assets below market price. Hougan emphasized that these approaches only work under specific conditions and require flawless execution.