Top Crypto Treasuries Succeed by Embracing Complexity, Says Bitwise CIO
Digital asset treasuries (DATs) that merely accumulate cryptocurrency are unlikely to capture long-term investor interest, according to Matt Hougan, Chief Investment Officer at Bitwise Asset Management. Hougan believes that standing out in today’s highly competitive crypto landscape requires more than passive holding—it demands strategic engagement with the digital ecosystem.
“Simply buying crypto and adding it to a balance sheet isn’t difficult anymore,” Hougan noted in a recent post. “It used to be a bold move, but the environment has changed. Now, if that’s the extent of a company’s crypto strategy—even if it includes staking—investors are better served by choosing a crypto ETF.”
Bitwise itself has launched several exchange-traded funds tied to digital assets, including a Solana (SOL) ETF that incorporates staking rewards, reflecting a growing trend among ETFs to offer more dynamic exposure to the crypto sector.
To differentiate themselves, Hougan suggests that DATs must go beyond basic accumulation and adopt more sophisticated financial strategies. These might include participating in decentralized finance (DeFi) protocols, issuing overcollateralized smart loans, or generating yield through options strategies like covered call writing. While not all of these methods are guaranteed to succeed, they require a level of technical and operational expertise that, if executed well, can set a company apart.
“These are not trivial strategies,” Hougan emphasized. “They carry risks and require strong execution, but companies that manage to do them well could be rewarded with long-term credibility and investor confidence.”
As a prime example, Hougan pointed to MicroStrategy—a company he calls a “flagship” of the DAT model. With over 641,000 Bitcoin on its balance sheet, valued at more than $66 billion, MicroStrategy has not only accumulated crypto but also implemented a complex financial structure involving significant debt issuance backed by its crypto holdings.
“MicroStrategy’s strategy is anything but easy,” Hougan said. “It has $64 billion in Bitcoin against $8 billion in debt, and it continues to issue new debt to increase exposure. Try raising $56 billion in equity to buy Bitcoin without using leverage—that’s no small feat.”
The growing popularity of crypto treasuries is evident. A recent Bitwise report highlighted that 48 new companies added Bitcoin to their balance sheets in October alone, bringing the total to 207 DATs collectively holding over 1 million BTC, worth in excess of $101 billion.
However, the surge in DAT adoption has prompted skepticism about companies’ motives. Critics argue that some firms may be turning to crypto as a way to generate media buzz or distract from poor financial performance. A study by CoinGecko found that companies typically experience a temporary boost in stock price within the first 10 days of announcing a crypto pivot—but the gains are often short-lived.
“In many cases, the stock spikes quickly fade, and prices begin to decline shortly after,” the report noted. This pattern suggests that investors are beginning to look beyond the hype and assess whether a company’s crypto strategy involves genuine value creation or is simply a marketing tactic.
Hougan underscored this point by stating, “In the end, DATs are still companies. Those that take meaningful, difficult steps and execute well will earn long-term rewards. Those that chase easy wins without substance will eventually be penalized.”
Why Complexity Matters in Crypto Treasury Strategy
The crypto sector continues to mature, and so do investor expectations. In the early days, it was enough for a company to demonstrate interest in digital assets. But today’s market demands more. Investors want to see thoughtful, innovative strategies that reflect a deep understanding of the evolving crypto economy.
Staking, once a differentiator, is now commonplace. Many ETFs offer staking rewards, eroding one of the few advantages DATs previously held. To maintain relevance, treasuries must explore new value-generating mechanisms.
Engaging with DeFi: A Competitive Edge
Participation in decentralized finance presents one such opportunity. By lending assets on DeFi platforms, DATs can earn interest while supporting liquidity in the ecosystem. However, this strategy is not without risk. Smart contract vulnerabilities and market volatility are ever-present dangers. Companies must perform due diligence and maintain robust risk management frameworks.
Crypto Options and Yield Strategies
Another path forward is through crypto options—especially covered call writing. This strategy allows a company to generate income from its crypto holdings by selling call options, which can be profitable during periods of low price volatility. It’s a complex approach that requires active management and market expertise, but it can offer a sustainable revenue stream beyond simple price appreciation.
Transparency and Governance: Keys to Investor Trust
As crypto treasuries adopt more advanced strategies, transparency becomes critical. Investors are more likely to trust companies that provide clear reporting on their crypto activities, governance structures, and risk exposure. Just as in traditional finance, accountability builds credibility.
Risks of Overexposure and Leverage
While borrowing to expand crypto positions can amplify gains, it also increases the risk profile. Companies like MicroStrategy have used leverage to grow their holdings significantly, but this approach may not suit every firm. Overexposure to a single digital asset, especially one as volatile as Bitcoin, can lead to catastrophic losses during downturns.
Regulatory Uncertainty
Crypto treasuries must also navigate a complex and evolving regulatory environment. As governments and regulators pay closer attention to corporate crypto involvement, compliance will become a key differentiator. Firms that can adapt to new legal frameworks while maintaining operational efficiency will likely emerge as leaders.
Conclusion: The Road Ahead for DATs
The digital asset treasury model is still in its formative years. While the number of participating companies is growing, true innovation remains rare. Passive accumulation is no longer enough to impress investors or deliver long-term value. The future belongs to those who take calculated risks, engage with the broader ecosystem, and commit to doing the hard things that drive progress—not just headlines.