The financial health of Digital Asset Treasury (DAT) firms, which constituted a major source of crypto market buying since the second quarter, is rapidly deteriorating.

Data released Wednesday by the on-chain data platform Artemis indicates that the market premium for these crypto-holding entities has largely evaporated. According to Artemis’s ‘mNAV by Digital Asset Treasury’ metric, the Market Net Asset Value (mNAV) of DAT firms, which once exceeded 25, is now converging toward 1.0.

mNAV Ratio Plummets Toward Zero

The mNAV ratio is a critical valuation metric calculated by dividing a firm’s market capitalization by the net asset value (NAV) of its digital holdings. An mNAV greater than 1 signifies that the market assigns a premium to the company’s stock.

This means the market is recognizing its operating ability or future growth potential beyond its current crypto portfolio value. Conversely, an mNAV below 1 suggests the stock is undervalued, signaling low investor confidence.

mNAV by Digital Asset Treasury. Source: Artemis

The trend over the last six months has been sharp. Between May and June of this year, average mNAV for major DAT firms hovered between 1.9 and 2.0, even for conservative assets like Bitcoin (BTC).

However, this premium has severely diminished. As of Tuesday, the mNAV for BTC and ETH DATs is 1.1, while SOL DATs are 1.0. Even the outlier HYPE DATs have fallen to 2.1. Essentially, the premium once paid for gaining crypto exposure via DAT stocks has almost disappeared.

The resulting lack of confidence is visible in corporate balance sheets. The total amount of BTC held by DAT firms peaked at $92.6 billion on October 6 but has since fallen to $78.1 billion as of Wednesday. Similarly, ETH holdings dropped from a peak of $20.6 billion on October 27 to $17.6 billion, indicating significant market liquidation.

Total NAV by Digital Asset Treasury. Source: Artemis

DATs Called an ‘Exit Event’ for Prices

Omid Malekan, an Adjunct Professor at Columbia Business School, identified the decline of DAT firms as a root cause of the recent crypto price slump.

“Any analysis of why crypto prices continue to fall needs to include DATs, because in aggregate they turned out to be a mass extraction and exit event – a reason for prices to go down,” Malekan asserted.

Malekan criticized the business model, arguing that the significant costs associated with establishing public entities—particularly for shell/PIPE/SPAC structures, involving millions in fees to bankers and lawyers—mean that when investors buy DAT stock, they are effectively acquiring the underlying crypto at a steep discount due to these overhead expenses.

“There’s no free lunch. All the people who talked about DATs like they were pure upside are idiots who should not be taken seriously ever again,” he concluded bluntly.

Adding to the criticism, Matt Hougan, CIO of Bitwise Invest, suggests that DATs need more than mere coin accumulation to survive. He advised investors: “The best way to tell which DATs are worth paying attention to is to ask: Are they doing something hard?” Hougan warned, “If that’s all a DAT is doing, you are better off owning an ETF.”