The Digital Asset Treasury Company (DATCO) model is facing significant challenges as market premiums, which previously funded crypto purchases, have collapsed. Companies such as MicroStrategy and Metaplanet, which used these premiums to expand their Bitcoin and Ethereum holdings, are now experiencing a 'death spiral' of declining asset values and forced sales. The structural weaknesses of the DATCO model are becoming apparent, prompting firms to consider stock buybacks and mergers to maintain value.
In response to these pressures, Ethereum-based DATCOs are turning to staking and decentralized finance (DeFi) to generate returns. However, these alternative strategies introduce new risks, complicating the financial landscape for these companies as they navigate the shifting market conditions.
DATCO Model Struggles as Market Premiums Disappear
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