Over the past year, Bitcoin (BTC) and Ethereum (ETH) have become the main focus for a growing number of Digital Asset Treasuries (DATs), largely due to supportive crypto regulations worldwide. However, recent Reuters reports suggest that attention is now shifting toward lesser-known alternative cryptocurrencies.
DAT Firms Look Beyond Bitcoin for New Opportunities
As of September, there are at least 200 DAT companies, most of which concentrate on Bitcoin, with a combined market value of around $150 billion. This marks a more than threefold increase from the previous year.
New companies are entering the market daily, many of them penny stocks seeking ways to boost profits. With Bitcoin’s value falling, these firms are increasingly exploring new tokens in pursuit of higher returns.
In recent weeks, companies like Greenlane, OceanPal, and Tharimmune have announced plans to acquire tokens such as Berachain (BERA), Near Protocol (NEAR), and Canton Coin (CC), respectively.
Peter Chung, head of research at Presto Research, noted that while the initial excitement around DATs has faded, there is still potential for a comeback.
An OceanPal representative told Reuters that their purchase of NEAR tokens was aimed at utilizing the asset’s built-in artificial intelligence (AI) features.
Retail Investors Lose $17 Billion in Crypto Treasuries
Earlier this year, many digital asset treasury companies traded at a premium to their crypto holdings, as investors believed these firms could use credit to buy more tokens.
However, with Bitcoin’s recent downturn and a surge of companies imitating Strategy (formerly MicroStrategy), some are starting to struggle. Reuters reports that at least 15 Bitcoin treasury firms were trading below the net asset value of their tokens as of last Friday.
According to estimates from Singapore-based 10x Research, retail investors, who were major buyers of prominent Bitcoin treasury companies, lost approximately $17 billion on these investments.
Other digital asset treasuries focusing on leading cryptocurrencies are also facing difficulties. ETHZilla and Forward Industries have recently approved share buybacks, a move often used to prop up stock prices.
Despite the potential for higher returns, analysts warn of the risks involved. Cristiano Ventricelli, vice president and senior digital assets analyst at Moody’s Ratings, cautioned that moving into “exotic” and less liquid cryptocurrencies could significantly increase risk.
Ventricelli noted that when market conditions deteriorate, companies invested in these assets face greater pressure on their equity.
Michael O’Rourke, chief market strategist at JonesTrading, also expressed concern that most digital asset treasury companies might eventually trade at a discount to their digital holdings.
Featured image from DALL-E, chart from TradingView.com
Frequently Asked Questions
Of course Here is a list of helpful and clear FAQs about cryptocurrency treasuries shifting their focus to alternative coins
Beginner Definition Questions
1 What is a cryptocurrency treasury
A cryptocurrency treasury is a reserve of digital assets held by a company organization or DAO instead of or in addition to traditional cash
2 What are altcoins
Altcoin is short for alternative coin It refers to any cryptocurrency other than Bitcoin Ether is the most wellknown altcoin but there are thousands of others
3 Why did treasuries used to focus only on Bitcoin and Ether
Bitcoin and Ether are seen as the most established and least risky crypto investments Bitcoin is considered digital gold and Ether is the foundation for most decentralized applications making them safer starting points
Reasons for the Shift Benefits
4 Why are treasuries now looking at altcoins
Treasuries are seeking higher potential returns While riskier many altcoins have significantly outperformed Bitcoin and Ether during market upswings
5 What are the potential benefits of a treasury holding altcoins
The main benefits are diversification and the potential for much higher growth It can also show support for specific blockchain projects a company believes in
6 Doesnt this just mean theyre chasing the next big thing
Sometimes yes Theres a speculative element However many treasuries are doing deep research to invest in projects with strong technology and realworld use cases not just hype
Risks Common Problems
7 What are the biggest risks of investing in altcoins
High Volatility Prices can swing wildly
Lower Liquidity It can be harder to buy or sell large amounts without affecting the price
Project Failure Many altcoin projects fail entirely
Regulatory Uncertainty Governments may crack down on specific types of coins
8 How is this different from a company gambling with its money
A responsible treasury doesnt gamble They typically allocate only a small portion of their total treasury to higherrisk altcoins treating it like a venture capital investment rather than a safe store of value