Bitwise CIO: The premium of the encryption treasury company (DAT) is difficult to maintain, facing three major downward pressures: insufficient liquidity, operational costs, and execution risks.

Bitwise Chief Investment Officer Matt Hougan recently stated that the valuation of digital asset management companies (DAT) is unlikely to remain above the value of the crypto assets they hold. He pointed out that the structural friction in the DAT model makes sustained premiums the exception rather than the norm.

Hougan believes that most DAT face inevitable downward pressure due to insufficient liquidity, operational costs, and execution risks. He stated that these factors continuously lower the market value of DAT, making it less than the value of the Crypto Assets it holds, while only a few uncertain factors can drive up the price of each coin.

Hougan stated that DAT is a “high-barrier” category and remarked: “Most DATs will trade at a discount, with only a few exceptional companies able to trade at a premium.”

Hougan attributes structural discounts to three main pillars, the first being insufficient liquidity. He describes it as a fundamental resistance, as DAT investors hold assets indirectly rather than directly. “Why pay full price for Bitcoin that you won’t receive for a year?” he asked, noting that any delays or friction would lead to automatic devaluation, while operational costs and executive compensation would dilute the earnings per share of crypto assets over time.

Finally, Hougan emphasized the risks: investors must take into account the possibility that the fund management company “may encounter some errors,” whether such errors are due to poor execution, mismanagement, or unexpected losses.

These factors combined constitute the basic discount that DAT (digital asset management company) must overcome. He pointed out that only a few strategies can offset this structural resistance. These strategies include issuing bonds, lending tokens, selling options, or purchasing assets at a discounted price—but all of these strategies are only effective under specific conditions and often introduce new risk points.

Hougan added, “As time goes on, costs and risks will continue to accumulate,” and even well-performing DATs are finding it increasingly difficult to maintain performance across different cycles. (Cryptonews)