Bitcoin's Institutional Credibility Shaken as DATs Collapse
Bitcoin's institutional credibility is under threat as overvalued Digital Asset Treasuries (DATs) start to collapse, leading to significant losses for investors. This comes as the number of corporate Bitcoin holders has surged, with 48 new companies joining the fold during Q3.
The bursting of these DAT 'bubbles' has caused investors to reassess their exposure to Bitcoin. While there's no concrete evidence of institutions pulling out of Bitcoin DATs, recent withdrawals of Bitcoin ETFs, such as over $94 million, including $82.9 million from Grayscale, have raised eyebrows.
Retail investors have borne the brunt of the losses, with an estimated $17 billion wiped out after buying into Bitcoin-related companies at inflated prices. Companies like MSTR and Metaplanet have seen their share prices plummet, leaving investors out of pocket.
Despite this, the number of corporate Bitcoin holders has grown by 38% to 172 during Q3, with these companies purchasing a total of 176,000 BTC. MSTR, with nearly 640,000 BTC in its treasury, remains the largest corporate holder, nearly 13 times the size of the second-largest holder, MARA Holdings. MSTR's Bitcoin-focused strategy has also outperformed the 'Magnificent 7' stocks in annualized return.
The bursting of overvalued DATs puts Bitcoin's institutional credibility at risk, with retail investors suffering significant losses. Despite this, corporate interest in Bitcoin remains strong, with the number of holders increasing. As the market navigates these challenges, investors and institutions alike are urged to exercise caution and thorough due diligence when investing in Bitcoin-related companies.
