Catenaa, Thursday, November 06, 2025- Venture capital investors are closely watching digital asset treasury (DAT) firms as buybacks rise, signaling an evolving strategy to manage net asset value discounts and support share prices.
ETHZilla recently sold $40 million in Ether to fund a buyback, sparking debate about the broader implications for DATs.
Most investors said such asset sales are likely isolated measures rather than a trend, with management teams avoiding sales of core holdings unless valuations drop sharply. Buybacks can close NAV gaps, enhance shareholder value, and are considered rational when stocks trade at steep discounts.
Analysts emphasized that liquidity and capitalization discipline are critical to prevent destabilizing cycles in the sector.
Concerns center on a potential “DAT death spiral,” where prolonged sub-NAV trading forces firms to sell treasuries, eroding NAV and prompting investor pressure.
VCs identified early warning signs, including shrinking transparency, repeated ad-hoc buybacks, and aggressive debt terms.
Over-leveraged DATs are seen as most vulnerable, particularly if dollar-denominated debt must be repaid during crypto downturns.
Experts said DATs with strategic execution, active management, and sustainable models, such as generating yield from stablecoin issuance or supporting underlying networks, are better positioned to outperform. Firms with strong strategies and disciplined management are expected to thrive, while those structured mainly as public “trade” vehicles face higher risk.
