Bitcoin DATs Buying Slowdown: Is the Treasury Bandwagon Losing Steam?

Bitcoin Digital Asset Treasuries (DATs) are seeing a slowdown in buying, raising questions about the sustainability of this trend. Are DATs struggling to outperform simple Bitcoin ETFs?

Yo, crypto fam! The Bitcoin treasury bandwagon might be hitting a speed bump. While more companies are jumping on board, their appetite for scooping up BTC seems to be weakening. Let's dive into what's happening with Bitcoin, DATs, and this potential buying slowdown.

DAT Inflows: From Feast to Famine?

The numbers don't lie. The seven-day moving average of net daily inflows into Bitcoin Digital Asset Treasuries (DATs) has taken a serious nosedive. We're talking a drop to 140 BTC, the lowest since mid-June, compared to a whopping 8,249 BTC back in July, according to BitcoinTreasuries.net. Peep the daily action this month, and it's even bleaker: most days saw less than 500 BTC flowing in, with some days seeing absolutely zero inflows. Ouch!

This suggests that institutional interest in BTC via traditional market vehicles has cooled off after a period of aggressive buying earlier this year, which helped boost BTC prices. And speaking of price, Bitcoin's rally has slowed down, dropping to around $110,000 after hitting a record high of over $126,000 on October 6.

The DAT Dream vs. Reality

The whole DAT trend, popularized by companies like MicroStrategy, is based on the idea of borrowing fiat to acquire scarce assets like Bitcoin. With Bitcoin's fixed supply and impressive performance, it's been seen as a hedge against inflation. So far, the top 100 public DATs have acquired over 1 million BTC.

But here's the catch: Bitcoin doesn't offer a yield. Coins acquired with borrowed money just sit there without generating cash flow. The DAT strategy relies on prices continuing to rise, generating capital gains. Think of it as running a company focused on acquiring gold, another zero-yielding asset.

The most common strategy? Issuing stock at a premium to the net asset value (NAV) and then issuing debt to finance purchases. But that premium is based on the narrative and the "memetic premium" of the company's figurehead, according to NYDIG. These firms are vulnerable if they can't generate enough memetic premium or if investors dump their shares, causing the premium to NAV to collapse.

And guess what? It's already happening. About one in four publicly traded DATs are now trading below their NAV, meaning their market valuations are less than the value of the cryptocurrencies they hold. NYDIG says these premiums are tied to prices, so a Bitcoin downtrend could wipe them out.

DATs vs. ETFs: A Growing Frustration

As Strive Asset Management CEO Matt Cole bluntly put it, “Just buy an ETF.” That sums up the growing frustration with DATs. Bitcoin is up about 23% this year, but most DATs, including MicroStrategy and GameStop, have underperformed both BTC and ETFs tracking it. Only a few, like Twenty One Capital and Metaplanet, have managed to beat the benchmark.

The issue? These companies were supposed to outperform BTC through leverage or clever financing, but most are lagging behind simple exposure. The promise of levered beta only works if equity markets stay friendly. Think about how risky MicroStrategy's debt would look if interest rates went up.

The Future of DATs

Corporate Bitcoin adoption isn't a mirage; it's growing. There are almost 40% more public companies holding Bitcoin today than three months ago. Some are real companies that hold BTC because of their industry, like Coinbase or Bitcoin miners. Others use it as a hedge against fiat instability.

However, it's important to distinguish between these companies and BTC DATs. Some DATs even list proof-of-stake altcoins like ETH or Solana, earning yield from network activity itself. For example, owning an ETH or TRX DAT would get exposure to Ethereum or Tron. In theory, this turns treasuries into miniature ecosystems, compounding value as the network grows.

Still, most DATs haven't figured out how to translate balance-sheet size into operational yield or network participation. They were supposed to be smarter than ETFs, but many are just leveraged proxies for Bitcoin beta.

The Takeaway

Until more treasury firms can prove they can compound capital faster than a passive ETF, the simplest advice might be the best: just buy the ETF. The Bitcoin DAT buying slowdown is a sign that the treasury bandwagon needs to prove its worth. Otherwise, it might just be a bumpy ride to nowhere.

So, what's the play? Keep an eye on those DATs, watch the Bitcoin price action, and remember: sometimes, the simplest strategies are the best. Peace out!