Crypto treasury companies hit $340 billion market cap as altcoin DATs outperform

Crypto digital asset treasury companies (DATs) have been among the best-performing crypto equities since the start of the bull trend.

DATs buy and hold cryptocurrencies to raise capital at a premium and use it as leverage to buy more tokens. Investors are willing to buy DAT shares because these companies take leveraged positions in the underlying assets, which are intended to amplify returns.

Cumulative market capitalization for these companies is up 10% since mid-August and hovers around $340 billion. However, this is still a far cry from the roughly $490 billion seen around October and November last year when bitcoin reached an all-time high around $126,000.

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Performance has varied across DATs. Established names like Strategy (MSTR) and Bitmine (BMNR) are up 30% and 27%, respectively, generally in line with the price appreciation of their underlying bitcoin and ether. Strategy has even outperformed BTC by 10% since August 17.

However, new-age DATs with less attention have been some of the best-performing crypto-related vehicles so far this cycle. Altcoin DATs CYPH and PURR track underlying tokens for Zcash (ZEC) and Hyperliquid (HYPE). The tokens have also performed strongly, with HYPE up 36% and ZEC up 56%. PURR and CYPH, on the other hand, have returned 62% and 142%, respectively.

Crypto DATs are evolving as these companies expand to different tokens. One of the more interesting propositions is a DAT's ability to participate in an ecosystem. Ethereum DATs stake ETH and help secure the network, PURR runs a Hyperliquid validator to vote in governance, and CYPH operates a mining operation to contribute hashrate to the network. These functions were largely unavailable to Strategy since Bitcoin is an unproductive asset, but they give these DATs a unique value proposition within their blockchains.

As these DATs gain traction and push their mNAV to a premium, they enable an accretion flywheel in which issued shares are used to buy more tokens accretively for the holder.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.