Inside the DAT debate – Critics say one thing, and the data shows another

Key Takeaways 

Why are DATs facing community backlash? 

Their alleged supply overhang and VC links have spooked some members.

What’s next for DATs? 

The MSCI review by mid-January may determine the sector’s fate. 

Digital asset treasuries (DATs) are back in the news following the threat of MSCI index exclusion and the ongoing market sell-off. 

In particular, SharpLink, one of the ETH-focused DAT, offloaded $33.5 million in ETH, further putting pressure on an already fragile market.

It also made another dump earlier in November, and the trend attracted negative criticism, labeling DATs as “terrible, VC scams with overhangs.” 

However, Hasseb Qureshi, a Partner at VC firm Dragonfly, discredited the generalization. He stated that DATs aren’t “net selling pressure” and added, 

“So DATs may have ran up too large, but the idea that when it’s all said and done, DATs were net bad for crypto prices is obviously wrong.”

Source: X

He noted that the DATs would probably begin buying again after improving the mNAVs above  1. 

Who’s selling?

On the sell-off from SharpLink and likely pressure from other firms whose mNAVs have dropped below 1 (crypto holdings value has fallen below their enterprise value), Haseeb retorted, 

“Markets are not moving because of DAT selling. Almost no DATs have sold anything. The ones that have are tiny.”

Some of the largest VC firms, like MultiCoin Capital, helped form Forward Industries, one of the largest Solana-focused treasury firms.

Other smaller players had support either from VCs, or chain’s foundation, or individual capital raises.

Given the infamous history of “VC tokens” that are often dumped on the retail market when the vesting period ends, the suspicion remained strong during these VC-led DATs. 

Crypto treasuries shed $45 billion

That said, the top DAT leaders, such as Ethereum [ETH]-focused BitMine Immersion, Strategy, or SOL’s Forward Industries, had no record of selling their holdings, at least as of the time of writing. 

Additionally, the planned reclassification of DATs by the MSCI index may put more pressure on the space and the entire crypto market, according to some analysts. 

In fact, David Bailey referred to the DAT exclusion threat as “Operation ChokePoint 3.0,” drawing parallels with the banking access restrictions placed on crypto firms during the Biden era. 

“For a systemically important equity index to single out Bitcoin and digital asset companies for deindexing and ineligibility after years of actively blessing their inclusion is discriminatory and capricious. We should call it what it is: Operation Choke Point 3.0.”

That being said, crypto treasuries have lost over $45 billion in value as DATs’ holdings dropped from $140 billion to $97 billion amid the Q4 correction. 

Source: The Block