Hotcoin Research | How Long Can the DAT Flywheel Spin — Crypto Wealth Feast or Bubble Trap?

I. Introduction

The year 2025 marks the beginning of DAT’s explosive growth. An increasing number of publicly listed companies are adopting the Strategy model, incorporating BTC, ETH, SOL, BNB, and other cryptocurrencies into their balance sheets as core reserves, while steadily expanding their holdings through equity financing. This practice has created a powerful resonance between token prices and stock prices. On one side, investors purchasing company shares gain indirect, long-term exposure to cryptocurrencies. On the other hand, companies capitalize on stock price premiums to raise additional funds and acquire more digital assets, setting in motion a self-reinforcing financial flywheel.

This flywheel effect can be understood by examining how the DAT model achieves a cycle of dual appreciation in both stocks and tokens during bull markets. The mechanism becomes clearer when looking at real-world case studies of how companies adopt and execute DAT strategies with BTC, ETH, SOL, BNB, and other emerging tokens. These examples reveal the strategic intent and financing tools behind DAT, while also highlighting the innovative ways firms are positioning themselves in both traditional and digital markets.

Yet, the picture is not without risks. As the model expands, it faces growing challenges from stricter regulation, intensifying competition, and volatile macroeconomic conditions. The same flywheel that accelerates growth in favorable markets could also amplify vulnerabilities in downturns, raising questions about how sustainable this strategy truly is.

Ultimately, DAT is more than corporate-level asset allocation. It represents a new bridge between crypto and traditional finance, one that is reshaping market narratives, redirecting capital flows, and influencing macro-level capital allocation over time. For investors, understanding this emerging model is critical not only to grasp how token prices and stock valuations interact, but also to recognize the risks hidden behind the apparent momentum of the flywheel.

II. The DAT Flywheel Effect: A Positive Cycle of Dual Growth in Tokens and Stocks

1. Definition and Growth Logic of DAT

DAT (Digital Asset Treasury) refers to the practice of publicly listed companies, private enterprises, or investment vehicles strategically and long-term holding cryptocurrencies such as Bitcoin and Ethereum on their balance sheets or equivalent entities. The model operates as a closed loop in which companies raise funds through equity or debt financing, allocate those funds to purchase spot crypto assets, and then reflect the results through market disclosure and valuation. In doing so, they amplify both per-share crypto exposure and capital efficiency. At its core, DAT is an asset allocation framework that connects corporate equity with on-chain assets.

The essence of the DAT model lies in a stock-financed crypto accumulation flywheel, a mechanism that can self-reinforce in bull markets by simultaneously driving stock and token prices higher. This approach was first validated in 2020 by Michael Saylor, founder of Strategy, and its basic logic can be summarized as follows:

• Crypto accumulation: Companies use raised funds to purchase cryptocurrencies such as BTC and ETH as reserves.
• Stock premium increase: As these companies provide compliant and convenient crypto exposure, their stock prices begin trading at a premium above net asset value (NAV). Investors are willing to pay this premium, effectively recognizing the potential appreciation of the crypto holdings.
• Premium-driven refinancing: Rising stock prices enhance refinancing capacity, enabling companies to issue new equity or low-interest convertible bonds at favorable valuations.
• Expanding crypto reserves: Most of the new financing is allocated to additional crypto purchases, further enlarging reserves.
• Narrative reinforcement: Growing crypto holdings strengthen the “crypto proxy stock” narrative, fueling higher stock premiums and setting the stage for the next round of financing.

2. Manifestations of the DAT Flywheel Effect

In bull markets, this cycle creates powerful positive feedback, often described as an “infinite ammo” model: companies buy crypto, crypto prices rise, stock prices follow, refinancing capacity expands, and the process repeats with even larger purchases. This dynamic allows investors to benefit not only from token price appreciation but also from leveraged returns via equities. Between 2023 and 2025, for example, Bitcoin rose about 110%, while Strategy’s stock soared over 910%. Capital leverage and valuation premiums enabled DAT stocks to deliver far higher returns than direct crypto holdings.

• Strategy’s BTC Treasury: Since adopting its Bitcoin treasury strategy, Strategy’s stock price has surged more than 2,200% within five years. Its Bitcoin holdings expanded from zero in 2020 to 639,835 BTC worth over $73 billion, making it the largest publicly listed Bitcoin holder globally and pushing its market capitalization far beyond the value of its original software business.
• BitMine’s ETH Treasury: In 2025, U.S.-listed BitMine launched an Ethereum treasury, sending its stock price up more than 1,100% in a single month. Roughly 60% of the gain came from surging per-share ETH holdings (+330%), while 20% was driven by ETH’s price rise (from $2,500 to $4,300) and another 20% from mNAV premium expansion.

According to Coinbase Research, Bitcoin-focused DAT companies collectively hold over 1 million BTC, representing about 5% of the circulating supply. Ethereum-focused DAT companies hold around 4.9 million ETH, or roughly 4% of the total supply. Altogether, DAT companies worldwide control more than $100 billion worth of digital assets, making them one of the most influential buying forces in the crypto market today.

III. A Review of Typical DAT Strategies: From BTC to Diversified Asset Allocation

As the DAT concept extends beyond Bitcoin, companies are adopting diversified strategies around multiple crypto assets.

1. Bitcoin Treasury Pioneers: The Hoarding Strategy

Bitcoin was the first arena where DAT gained real traction. Strategy’s bold move in 2020 set the precedent, and soon a growing number of companies followed as dedicated “BTC hoarders.” According to CoinGecko, 108 publicly listed companies now collectively hold more than 1 million BTC, representing roughly 4.9% of total circulating supply.

• Strategy: Since August 2020, Strategy has consistently funneled both revenue and financing into Bitcoin. It now holds nearly 640,000 BTC, or about 3% of total supply. By repeatedly raising capital through equity and bond issuance, the company achieved exponential growth in both market value and reserves. Its success effectively validated Bitcoin as a viable corporate reserve asset.
• Metaplanet: Once positioned as a Japanese metaverse company, Metaplanet pivoted in April 2024 into a Bitcoin treasury firm, using BTC to hedge against yen depreciation and other macro risks. As of September 25, 2025, the company held 25,555 BTC at an average purchase price of $106,065, with a total cost of $2.71 billion and slight unrealized gains. This scale makes Metaplanet the fifth-largest corporate BTC holder globally, pushing its share price up more than 140% year-to-date and securing inclusion in the FTSE Japan Index.
• Mining companies (MARA, RIOT): U.S.-based Marathon Digital (MARA) and Riot Platforms (RIOT) operate as both miners and treasury holders. They accumulate Bitcoin through mining and often choose to hold rather than sell during bull markets. MARA currently holds over 50,000 BTC, while RIOT holds 19,000 BTC. Their model essentially converts electricity into BTC reserves, though their stock prices remain highly correlated with Bitcoin’s price movements.
• Other entrants: A number of traditional small-cap firms are also pivoting into “crypto proxy stocks” by making large-scale BTC purchases. For example, China Mingcheng Group (NASDAQ: CREG), originally a construction subcontractor, announced in August 2025 that it had purchased $483 million worth of Bitcoin, sending its share price soaring.

It is worth noting that as the number of BTC treasury companies continues to grow, the associated “scarcity premium” has begun to diminish. Strategy’s early success was amplified by its uniqueness, but today the simple narrative of “buy BTC to boost stock price” is no longer novel. With competition intensifying, the mNAV premiums enjoyed by BTC treasury firms are gradually narrowing, signaling a maturing market dynamic.

2. The Rise of Ethereum Treasuries: From Reserve Asset to Yield Asset

The year 2025 is widely regarded as the inaugural year of Ethereum treasuries. In the past, companies typically held ETH to meet business needs such as transaction fees or ecosystem participation, rather than treating it as a strategic reserve. This year marks a shift: several firms have formally added ETH to their balance sheets, while also leveraging staking to generate yields — an evolution from simple reserve holding to a model of “reserve plus income.” According to CoinGecko, 12 publicly listed companies now hold a combined 3.78 million ETH, representing about 3.1% of total supply.

• BioNexus: In March 2025, Southeast Asia–based BioNexus became the first publicly listed company to formally adopt ETH as a reserve asset, signaling growing recognition of Ethereum’s role as a store of value. Unlike Coinbase, which primarily holds ETH for operational needs, BioNexus deliberately positioned ETH as a strategic reserve and investment vehicle.
• BitMine Immersion (BMNR): In mid-2025, BitMine announced its ambition to hold 5% of the global ETH supply. By September 25, it had already accumulated 2.416 million ETH (around 2% of the circulating supply), making it the largest ETH treasury worldwide. BitMine has fueled this expansion through convertible bonds and equity issuance, with most of its holdings deployed into staking for yield — transforming ETH’s productive property into recurring cash flow.
• SharpLink (SBET): The Nasdaq-listed sports betting technology company made an aggressive pivot into ETH treasury management in 2025. Through weekly at-the-market (ATM) offerings, SharpLink accumulated over 830,000 ETH, with nearly all of it staked for rewards. While critics warn about the risks of staking concentration, proponents argue it represents the best practice in converting ETH into a productive, income-generating asset.
• BTCS Inc.: This U.S.-based blockchain firm introduced an innovative “ETH dividend + loyalty reward” program, distributing Ethereum directly to shareholders as dividends while offering bonus ETH to long-term holders. The strategy incentivizes shareholder retention and discourages short-selling, showcasing creativity in financial engineering, though questions remain about its long-term sustainability.

The rise of Ethereum treasuries underscores how DAT is evolving from passive accumulation to active yield generation. By integrating staking and DeFi strategies, companies aim to create additional value for shareholders rather than relying solely on price appreciation. Some analysts suggest that ETH treasuries could prove more resilient than BTC treasuries in market downturns, since staking yields provide a steady income stream that helps cushion valuation pressures.

3. The Solana Treasury Boom: A Race Fueled by Massive Capital

In the second half of 2025, Solana has emerged as a new focal point in the DAT landscape. Following the precedent set by Bitcoin and Ethereum, SOL is now rapidly gaining traction among institutions. At present, nine publicly listed companies collectively hold about $2.7 billion worth of SOL, equivalent to roughly 2.5% of the circulating supply.

• Forward Industries (FORD): Formerly a healthcare and tech product design firm, FORD repositioned in September 2025 as a “Solana treasury company.” Backed by a $1.65 billion PIPE deal led by Galaxy Digital, Jump Crypto, and Multicoin, it aims to become the world’s largest SOL treasury. Its strategy emphasizes full on-chain staking and the tokenization of stock issuance on Solana.
• DeFi Development Corp. (DFDV): DFDV has adopted SOL as its core reserve asset, reporting holdings in “SOL per Share” (SPS). The company combines long-term accumulation with diversified staking and validator operations, generating income from both staking rewards and transaction fees.
• Upexi (UPXI): Originally a multi-brand consumer goods company, Upexi pivoted in 2025 into a “SOL treasury + asset manager.” Funded through PIPEs and convertible bonds, it acquired substantial SOL reserves, locking most into staking programs and discounted lock-ups to boost returns. The firm also appointed Arthur Hayes as an advisor, strengthening its market credibility and investor relations.
• Sharps Technology (STSS): This medical device firm began its Solana treasury strategy in September 2025, funded by a PIPE deal. Its model follows a cycle of capital raising → SOL accumulation → staking for yield, echoing the DAT flywheel structure.
• Sol Strategies (HODLF): A Canadian-listed Solana ecosystem company, Sol Strategies invests in SOL reserves and operates validators, steadily shifting its portfolio toward SOL to reinforce its long-term ecosystem alignment.

The Solana treasury boom reflects the growing willingness of institutional capital to expand beyond Bitcoin and Ethereum into multi-chain assets. With its high technical performance and vibrant ecosystem, Solana is quickly establishing itself as the third most favored asset after BTC and ETH. Heavy inflows during August–September 2025 pushed SOL above $250, underscoring the intensity of demand. Yet Solana treasuries remain small in scale and relatively untested, leaving questions about their long-term resilience. Their eventual success — or failure — will be pivotal in determining whether SOL secures a lasting place among mainstream institutional assets.

4. Emerging Asset Treasuries: BNB, TRON, SUI, ENA, and More

BNB is also beginning to see treasury adoption. On August 10, BNB Network Company (BNC) announced a $160 million purchase of 200,000 BNB, becoming the largest corporate BNB holder worldwide. Its reserves have since risen to 418,888 BNB (about $368 million). BNC aims to accumulate 1% of the total BNB supply by the end of 2025, positioning itself as the “Strategy of BNB.” CEO David Namdar, a former Galaxy Digital partner, has emphasized the firm’s ambition to deepen integration with the Binance Smart Chain ecosystem.

Beyond BNB, other emerging tokens are also witnessing treasury activity, often backed by project teams and venture capital through shell listings or reverse mergers.

• In June, TRON Group achieved a Nasdaq listing via reverse merger with SRM Entertainment, later rebranding as Tron Inc. to lay the foundation for a TRX treasury strategy.
• In July, Mill City Ventures (MCVT) announced a $450 million private placement, allocating 98% to SUI purchases and pivoting into a SUI treasury firm.
• In September, StablecoinX made repeated large purchases of ENA, fueling speculation that it is building an ENA treasury.

Taken together, these developments highlight how DAT has evolved from a Bitcoin-dominated model into a multi-chain, multi-asset landscape. BTC remains the anchor, ETH is gaining traction through staking-driven yield, SOL is expanding rapidly, and BNB and other assets are entering the mix. Institutional accumulation enhances market confidence and token scarcity, but long-term sustainability will ultimately hinge on the intrinsic value and ecosystem strength of each asset. Without solid fundamentals, simple token hoarding is unlikely to win lasting investor support.

IV. Risks and Challenges of the DAT Model

Although the DAT flywheel demonstrates formidable power during bull markets, its pro-cyclical risks and external challenges cannot be overlooked. The industry has now entered a competitive phase marked by ongoing elimination. The key risks include:

1. Regulatory Tightening and Financing Restrictions

In early September 2025, Nasdaq unexpectedly increased scrutiny on “crypto-purchasing companies.” New rules require any listed company seeking to issue new shares for crypto purchases to first obtain shareholder approval. The measure is intended to curb frequent fundraising and hoarding that inflate stock prices. Regulators worry that DAT is being used as a form of regulatory arbitrage, since compared with ETFs, DAT firms face lower listing thresholds while achieving similar effects. Nasdaq’s new rules, along with closer SEC oversight, suggest the DAT model will face stricter regulation. While this may foster standardization over the long run, in the short term, financing efficiency could decline, slowing the flywheel.

2. mNAV Discount and Sell-off Risk

The market NAV multiple (mNAV) measures a DAT stock’s valuation relative to its crypto holdings. During bull markets, most DAT firms trade at a premium above 1, reflecting growth expectations. But when markets reverse or confidence weakens, mNAV can fall below 1, meaning stocks trade at a discount to underlying crypto value. Since September, many DAT shares have dropped sharply, accompanied by collapsing mNAVs, raising doubts about their ability to keep raising capital. Prolonged discount trading pressures management to sell reserves for buybacks to lift stock prices back toward NAV. If multiple DATs sell simultaneously, the resulting downward pressure could trigger negative feedback loops in crypto markets.

3. Leverage and Debt Risks

To expand aggressively, many DATs rely on leverage through convertible bonds, short-term loans, and reverse mergers. In bull markets, leverage magnifies gains, but in bear markets it backfires. If crypto prices plunge, debt covenants and margin calls may be triggered, forcing companies into fire sales of reserves to avoid default. This could replicate the liquidation cascades seen during the 2022 crypto crash. DATs that went public via SPACs or reverse mergers are especially vulnerable, as they depend heavily on continuous external funding. Once financing windows close, liquidity can dry up quickly.

4. Homogenization and Niche-asset Risks

The surge of DAT firms in 2025 has created overcrowding. With the scarcity premium fading, outcomes are diverging. Weak players with copycat strategies will struggle to maintain valuations or even survive. DATs focused on niche altcoins face greater risks, particularly as compliant ETF products draw investor interest away. Performance will hinge on three factors: financing ability, reserve scale, and yield generation. Firms lacking all three may become acquisition targets. The sector is shifting from wild growth toward survival-of-the-fittest, where only differentiated strategies and disciplined execution will prevail.

5. Macro and Liquidity Shocks

The DAT model bridges equity markets and crypto spot markets, but under stress, it may suffer “double-kill” effects. In a global liquidity squeeze or a dual stock-bond sell-off, both DAT share prices and crypto reserves can collapse simultaneously. Panic-driven investors often dump both equities and crypto, leaving DAT companies under double pressure. Concentrated sell-offs from heavily exposed DATs could trigger stampedes and extreme volatility. As cross-market liquidity nodes, DATs may intensify systemic stress during crises.

In summary, the DAT model is inherently high-leverage and highly pro-cyclical: in bull markets, it surges, in bear markets, it collapses. The year 2025 will test whether the DAT narrative can transition from exuberance to sustainability. If the first half was dominated by flywheel euphoria, the second half is being shaped by regulatory and market pressures, forcing reality checks. Only firms with healthy financing structures, prudent allocations, diversified operations, and strong compliance awareness are likely to endure across cycles.

V. Opportunities and Future Outlook of DAT

Despite its challenges, DAT remains an innovative vehicle connecting traditional finance with the crypto economy. As the industry consolidates and regulations mature, it could unlock new opportunities and reshape market dynamics:

1. A New Gateway for Traditional Capital

DAT provides regulated and convenient access for traditional institutions that cannot hold crypto directly. Pension funds, insurers, and family offices restricted by mandates may be unable to buy tokens, but they can purchase Nasdaq- or NYSE-listed stocks. DAT firms, therefore, serve as a gateway to indirect crypto exposure.

With ETFs also expanding, institutions now have multiple entry points into crypto. Yet DAT retains a unique appeal through active management and yield enhancement. Unlike passive ETFs, DAT companies can deploy leverage, staking, and DeFi strategies to pursue returns beyond simple holding. For aggressive investors, high-quality DAT stocks may offer superior upside.

In the long run, DAT is likely to coexist with ETFs and trusts, collectively broadening institutional allocations to crypto and reinforcing the integration between traditional markets and digital assets.

2. From Passive Hoarding to Active Management

Currently, most DAT strategies revolve around a simple “buy and hold” model. Going forward, DAT firms may evolve into active digital asset managers, pursuing approaches such as:

• Deploying staking, lending, or market-making strategies to generate yield
• Running validator nodes or engaging with DeFi ecosystems to gain influence
• Expanding into real-world asset (RWA) tokenization to diversify portfolios

In the future, DAT companies may go even further — launching structured products, partnering deeply with DeFi protocols, or evolving into “on-chain banks.”

3. Market Impact: Accelerated Financialization and Institutionalization

DAT demand has already helped drive major crypto price increases in 2025. Spot purchases by DAT companies have been among the key forces behind the BTC and ETH rallies. At the same time, DAT is accelerating the financialization of crypto: equity investors gain indirect exposure through DAT stocks, while crypto reserves become scarcer and more institutionally concentrated, a trend that may reduce long-term volatility. Arbitrage opportunities between DAT stock premiums or discounts and crypto futures are also expanding, pulling more traditional capital into crypto-linked strategies.

4. Long-Term Issues and Potential Directions

To achieve lasting success, DAT must confront several key questions:

• How to manage private keys and on-chain security effectively?
• How to balance crypto reserves with core business operations?
• How to sustain investor confidence during bear markets?
• Whether sovereign wealth funds or even central banks might adopt DAT-like structures in the future?

Industry consolidation may eventually produce “crypto Berkshires” — large holding groups with diversified token portfolios and related businesses. In such a scenario, DATs could mature into a stable, institutionalized sector with profound market influence. Looking ahead, as higher-quality DAT companies emerge, the links between crypto and traditional finance will only deepen.

Crypto prices may increasingly respond to corporate earnings reports and shareholder behavior, while equity markets could develop a new class of “crypto concept stocks” tied to token cycles. At the same time, investor education will improve: many equity investors have discovered Bitcoin’s value through exposure to Strategy, underscoring the role of DAT firms as evangelists and value-discovery agents for crypto.

In 2025, DAT is transitioning from early experimentation to a competitive battlefield, where opportunities and risks are tightly intertwined. Ultimately, only firms that understand financial fundamentals, rigorously manage risk, and embrace compliance will win this new paradigm race.

Regardless of individual outcomes, the rise of DAT signals mainstream recognition of crypto: from corporate balance sheets to institutional portfolios, digital assets are being woven into the fabric of the global economy. The concept of crypto as a corporate reserve is now widely accepted, and while the DAT model faces challenges, its long-term impact is irreversible.

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