Horsley's Take: Why DAT Consolidation Is the Inevitable Next Chapter

The digital asset treasury sector is at an inflection point. Bitwise CEO Hunter Horsley recently signaled that the industry’s next evolution won’t be organic—it will be built through mergers and acquisitions. He projects that as DATs mature into operational enterprises, they will systematically absorb smaller, still-private crypto firms to drive growth. This shift reflects a broader reality: the winners in crypto treasuries will be those with scale, efficiency, and strategic execution.

The Valuation Problem Most Investors Miss

Before understanding why consolidation matters, it’s essential to grasp how DAT valuations actually work. Matt Hougan, Chief Investment Officer at Bitwise, recently broke down the fundamental flaw in how the market assesses these companies.

Most investors rely on surface-level metrics and overlook the mechanics that truly move valuations. Hougan posed a critical question: what is a DAT actually worth if it has a predetermined end date? Consider Bitcoin DAT as a case study. If it announced liquidation today, its trading price would equal its Bitcoin holdings exactly. But extend that timeline to one year, and the picture shifts dramatically. Investors would demand discounts for illiquidity, operational costs, and market risk—all factors that push valuations below net asset value.

However, some DATs trade above their managed net asset value (mNAV). How? Through active strategies: issuing debt, lending their crypto holdings, deploying derivatives, or acquiring undervalued assets. Yet these approaches demand sophistication and execution risk—only a select few companies master them consistently.

Scale Determines Survival

Hougan’s analysis pointed to an uncomfortable truth: size will separate the winners from everyone else. Larger DATs enjoy structural advantages—easier debt issuance, access to deeper liquidity pools, capacity for larger acquisitions, and greater income from lending and derivatives strategies. As the sector matures, expect a bifurcated market: a handful of premium-valued giants and many others trading at persistent discounts.

Horsley’s commentary reinforced this dynamic but added the critical piece: acquisitions are how that consolidation happens. Smaller private crypto firms lack the scale to compete. Rather than fade away, many will be absorbed into larger DATs seeking operational synergies and growth.

The Consolidation Thesis

Hunter Horsley emphasized that digital asset treasuries remain in their infancy. Yet the trajectory is clear. As these companies transition from passive holders to active operators, they will pursue strategic acquisitions. The next phase rewards those that build scale, execute efficiently, and integrate smaller teams effectively.

The message from Bitwise’s leadership aligns: DATs are still early, but the industry’s architecture is shifting toward consolidation. Scale, execution capability, and smart capital deployment will define which firms thrive—and which become acquisition targets.