The Collapse of Bitcoin Treasury Premiums: A Looming Structural Crisis in the DAT Model

The Digital Asset Treasury (DAT) model, once hailed as a revolutionary way to leverage Bitcoin's (BTC) price action through equity issuance, is now teetering on the brink of collapse. What began as a high-beta, self-reinforcing feedback loop has devolved into a fragile structure riddled with valuation risks and forced selling dynamics. As Bitcoin prices remain below critical psychological thresholds and market sentiment turns risk-averse, the DAT model's structural vulnerabilities are becoming impossible to ignore.

The Premium Model's Breakdown

At its core, the DAT model relied on equity premiums-where a company's stock traded above the Net Asset Value (NAV) of its Bitcoin holdings-to fund further Bitcoin accumulation. This created a flywheel: rising BTC prices → higher equity premiums → more share issuance → increased Bitcoin per share → higher premiums. However, this mechanism has reversed. With Bitcoin prices plummeting from ~$126,000 in October 2025 to ~$80,000 (rebounding to ~$92,000 at the time of writing), equity premiums have collapsed. Companies like Nakamoto (NAKA) and Metaplanet now trade at or below NAV, rendering new share issuance dilutive. For instance, NAKA has experienced an 83% drawdown in three months, behaving more like a distressed small-cap stock than a leveraged BTC proxy.

Structural Fragility and mNAV Dynamics

The metric of mNAV (market net asset value)-defined as a DAT's market cap relative to its crypto holdings-has become a critical indicator of distress. When mNAV exceeds 1.0, it signals investor confidence in the company's ability to compound value beyond its direct BTC exposure. Conversely, mNAV below 1.0 indicates that the stock price is trading at a discount to the underlying assets, triggering forced selling dynamics. As of November 2025, major DATs like BitMine trade at 0.73x mNAV, while SharpLink and Forward Industries hover at 0.82x and 0.74x, respectively. This compression reflects a loss of faith in the model's ability to sustain premiums, compounding valuation risks.

Leverage exacerbates these risks. Many DATs borrowed heavily to fund Bitcoin purchases, assuming perpetual equity premiums. Now, with mNAV near or below 1.0, they face difficult choices: issuing dilutive capital, tightening debt covenants, or selling crypto holdings to meet obligations. For example, Solana-focused DATs saw a 40% drop in aggregate net asset value from October to December 2025, creating a self-fulfilling prophecy of forced liquidations. This dynamic not only depresses BTC prices further but also tightens liquidity conditions, as Bitcoin's order book depth at the 1% price band collapsed by 33% between October and November 2025.

Forced Selling and Market Feedback Loops

The DAT model's reliance on capital markets has created a dangerous feedback loop. As BTC prices fall, DATs must sell their holdings to service debt or buy back shares, further depressing BTC prices. This cycle is amplified by index-driven risks. A proposed rule from a major index provider would exclude DATs with 50%+ crypto assets from widely followed indices, potentially triggering billions in forced sales as passive funds rebalance portfolios. Such structural pressures could accelerate a downward spiral, particularly if Bitcoin remains below the $107,000 high-water mark for many firms, leaving them with massive unrealized losses.

The Path Forward: A Model in Crisis

For the DAT model to recover, Bitcoin must not only rebound but also sustain prices meaningfully above $107,000 to re-establish premiums. However, this requires a broader shift into a "risk-on" environment, which seems unlikely given current macroeconomic conditions. Investors and market observers must monitor mNAV, reserve adequacy, and capital structures as key indicators of distress. Meanwhile, the potential for DATs to further depress BTC prices through forced selling remains a critical risk.

In conclusion, the DAT model's collapse underscores the fragility of leveraging equity premiums in a volatile asset class. As the market tests the limits of liquidity and investor psychology, the structural crisis in the DAT sector may reshape the crypto landscape for years to come.