DAT's All, Folks? More Like "That's Predictable, Idiots."
So, these "bitcoin treasury companies"—or DATs, as the crypto bros are calling them now—are tanking? Shocker. Galaxy Research, bless their hearts, issued a warning back in July that this whole house of cards would collapse once the equity premiums dried up. Guess what? They dried up. You can read more about their analysis in DAT’s All, Folks? What’s Next for Bitcoin Treasury Companies.
I mean, seriously, did anyone actually think this was sustainable? You load up on Bitcoin using overvalued stock as collateral, and then what? Everyone gets rich forever? Come on. It's like these people have never heard of a market correction. I swear, crypto attracts the dumbest money imaginable.
The Inevitable Plunge
The article lays it out: Bitcoin fell from its ridiculous peak, those equity premiums that these DATs were riding on evaporated, and now they're underwater. Metaplanet, which I guess is supposed to be the poster child for this idiocy, went from bragging about $600 million in unrealized profits to staring down the barrel of over half a billion in losses. Good.
And get this: Nakamoto Holdings—or whatever they're calling themselves now—saw their stock price drop by ninety-eight percent. Ninety-eight! That's not a drawdown, that's a damn freefall. It's basically a meme coin at this point. Serves 'em right for buying into this crap so late in the game. It's like showing up to a party just as the cops are arriving.
It's all that triple leverage, see? Operational, financial, and issuance leverage all piled on top of each other. It's like building a skyscraper out of popsicle sticks. Sure, it looks impressive for a minute, but one good breeze and it's all coming down. Now, it's not just about Bitcoin going down; it's about these companies' ability to even stay afloat. Are they gonna have to start dumping their BTC holdings just to survive? That'll be fun to watch.
I can't help but laugh here. I remember when everyone was falling allover themselves to buy into this, and I was saying "wait a second, hold on, this seems a little too good to be true". And I was right.
What Now? Survival of the Fittest (Or Just the Least Incompetent)
Galaxy Research is talking about "selective survival and consolidation." Translation: some of these companies are going bankrupt, and the slightly less-terrible ones are going to pick over the corpses. Strategy, apparently, is positioning itself to be the vulture in this scenario, building up a cash reserve to weather the storm. Smart move, I guess. But still, it's all built on a foundation of...well, not much.
The core shift is that these companies now look less like simply “leveraged upside on BTC” plays and more like path-dependent instruments whose payoffs depend heavily on issuance strategy and entry timing. Translation: they all timed the market wrong and are now paying the price.
Oh, and here's a fun thought: What happens when the SEC actually starts cracking down on these things? That's gotta be on the horizon, right? These DATs are basically unregulated investment vehicles, and the SEC loves nothing more than going after unregulated investment vehicles. It's like catnip to those guys.
You know, I had a dentist appointment last week, and the freakin' hygenist was giving me investment advice! Is anyone not trying to get rich quick off this Ponzi scheme?
The Inevitable "Next Cycle" Bullshit
Of course, the article ends with the obligatory "optionality on the next cycle" nonsense. The idea that, hey, if Bitcoin ever hits new all-time highs (again, highly debatable), these companies might regain some of their lost glory. Maybe. If they don't completely implode first.
Give me a break. These aren't "path-dependent instruments," they're gambling chips. Highly leveraged, poorly managed gambling chips. The fact that anyone is still talking about a "next cycle" for these things just shows how delusional the crypto world is.
