Omid Malekan, an adjunct professor at Columbia Business School and blockchain author, posits that crypto treasury companies, or Digital Asset Treasuries (DATs), have significantly contributed to the ongoing downturn in the crypto market. Malekan suggests that many of these entities functioned more as "mass extraction and exit events" rather than creating sustainable value.
In a post on X, Malekan asserted, "Any analysis of why crypto prices continue to fall needs to include DATs. In aggregate they turned out to be a mass extraction and exit event—a reason for prices to go down." He further noted that very few companies genuinely attempted to "create sustainable value," estimating them to be countable on one hand.
Malekan highlighted that numerous crypto treasury companies raised millions from investors seeking crypto exposure. However, he claims some founders viewed the model as a "get rich quick scheme." He detailed the substantial costs associated with launching a public entity, including:
- Millions for corporate structures like shell/PIPE/SPAC.
- Significant fees paid to bankers and lawyers.
These companies reportedly acquired a considerable supply of major cryptocurrency tokens, often leveraging share sales, convertible notes, and debt offerings. This practice has raised concerns that highly leveraged firms could exacerbate market downturns through forced asset sales.
Data indicates a rapid increase in companies adding crypto assets to their balance sheets. An October report by asset manager Bitwise identified 207 companies holding Bitcoin, totaling over one million tokens valued at more than $101 billion. Ether has also seen widespread adoption, with 70 companies collectively holding 6.14 million Ether, worth over $20 billion.
Market analysts predict this trend will likely lead to consolidation under a few larger players as the cycle matures, or encourage companies to expand into other Web3 sectors.