The $100 Billion Bitcoin Bet: How Treasury Companies Are Fueling The Crypto Run
A new class of public companies is reshaping the relationship between traditional equity markets and digital assets. Digital Asset Treasury Companies (DATCOs), firms that accumulate crypto assets like Bitcoin and Ethereum as a core business strategy, now collectively hold over $100 billion in cryptocurrencies. This rapid rise is making them a significant force behind the ongoing bull market in the crypto space.
The Rise of DATCOs
According to a research report by Galaxy Research, DATCOs currently hold approximately 791,662 BTC and over 1.3 million ETH. These holdings represent nearly 4% of Bitcoin’s circulating supply and more than 1% of Ethereum’s. The majority of these assets are concentrated in a few companies, with Strategy leading the pack with over 600,000 BTC, valued at $71.8 billion, accounting for more than 70% of all Bitcoin held by public treasury companies.
Financial Dynamics
The emergence of DATCOs has created a new financial ecosystem where Bitcoin prices are increasingly influenced by equity market mechanisms. These companies utilize strategies such as At-the-Market (ATM) equity programs and Private Investments in Public Equity (PIPEs) to raise capital based on the premiums of their share prices over the net asset value (NAV) of their crypto holdings. This capital is then used to acquire more digital assets, reinforcing their equity premium and attracting additional inflows. Companies like Strategy and Metaplanet have effectively implemented this cycle to bolster their treasuries.
Diversification and Expansion
Beyond Bitcoin, DATCOs are diversifying their portfolios into assets like Ethereum, Solana, BNB, and XRP. Ethereum-focused DATCOs are utilizing staking and DeFi strategies to generate yield on their holdings, a feature that Bitcoin currently lacks. Geographically, these companies are expanding beyond the U.S., with regions like Japan and Europe witnessing increased DATCO activity.
Risks and Rewards
While the DATCO model presents opportunities for growth, there are also risks involved. Fluctuations in equity premiums, market volatility, or regulatory changes could impact the sustainability of this model. Overreliance on PIPEs or excessive issuance through ATMs may dilute existing shareholders if not balanced by crypto gains. Companies may resort to share buybacks using crypto reserves to protect their NAV in case of a downturn.
Future Outlook
Despite the potential challenges, DATCOs are already exerting a visible influence on the crypto market. Excluding Strategy, these companies collectively hold around $32 billion in crypto, representing a growing footprint in the global market. As more entities adopt treasury-focused models, the DATCO framework provides compliant access to digital assets for institutions unable to hold crypto directly. While the model continues to drive demand in favorable market conditions, it also signals a shift in how investors perceive opportunities and risks in the evolving crypto landscape.
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