The significant corporate bitcoin acquisition frenzy of the summer has significantly slowed down, revealing the effects on the latest round of digital-asset treasury (DAT) stocks.
Many once-popular bitcoin treasury stocks are now trading below the value of the cryptocurrency they hold, compelling companies to move beyond merely buying and holding, and to consider whether the BTC on their balance sheets should be more actively managed.
“We’re transitioning from accumulation to stewardship,” said Thomas Chen, founder of Function, a company focused on transforming bitcoin into a productive asset. “The question is not about who is buying bitcoin today, but who can manage it like a treasury-grade asset,” he explained.
BTC treasury strategies beyond HODL
Spencer Yang, managing partner at the advisory firm BlockSpaceForce, notes a similar shift in sentiment among his clients. With the hype phase now largely behind them, companies that rushed to acquire BTC earlier this year are seeking ways to frame their allocations more as financial strategies than marketing ploys.
“Corporate treasuries have yet to actively put their bitcoin to work, but that’s something they should contemplate if they want to stand out,” Yang told RialCenter.
Chen proposed a potential BTC treasury strategy based on three main pillars: a portion of holdings generating conservative yield, another segment hedged against 20–30% drawdowns, and strict limits on size and exposure to diversify risks.
- Conservative yield: Utilize low-risk channels with clear rules for rehypothecation and collateral segregation. Focus on straightforward basis capture or overcollateralized lending at conservative loan-to-value ratios dictated by policy rather than sentiment. Avoid pursuing double-digit APYs reliant on unclear leverage.
- Downside hedges: Set up pre-approved derivative strategies (like puts or collars) with position limits, tenor specifications, and approval processes. The aim should be to stabilize volatility and safeguard the operating runway, not to speculate on short-term movements.
- Counterparty diversification: Distribute exposure among various custodians and liquidity providers; maintain ongoing credit and operational evaluations; set caps on per-counterparty exposures to prevent single points of failure.
Size is crucial for deployment, according to Spencer.
Larger treasuries can negotiate improved terms and justify dedicated risk teams, while smaller firms may need to keep a majority of their BTC idle, allocating only a small portion under strict policy limitations, he added.
Selling BTC to defend NAV could be ‘smart’
As DAT stocks fall below their net asset value and NAV discounts widen, a potential strategy is back on the table: Selling part of the BTC holdings to repurchase outstanding shares.
Yang suggested that this could oftentimes be a “smart strategy” for entities trading at significant discounts, showcasing to shareholders that management is not just passively collecting fees based on total assets.
“When a DAT is willing to sell underlying assets to protect its market NAV, it conveys confidence,” Yang stated. “Confidence is contagious. Once investors believe that leadership will safeguard value, the discount usually narrows as buyers come in.”
Yet, some managers may hesitate because reducing assets means lowering fees, a position that could weaken trust and push investors toward more disciplined alternatives, Yang argued.
The HODL argument isn’t obsolete yet, but it’s insufficient now.
In a market where many DATs are trading below the value of their own bitcoin, the companies that find ways to make BTC a productive reserve without turning it into a leveraged gamble may be the ones that endure.
Leave a Reply