The DAT bubble pops

They say history doesn’t repeat, but it rhymes—and Jim Chanos just heard a familiar tune.

The famed short seller who called Enron’s collapse back in 2001 just closed his short bet against Strategy (formerly MicroStrategy), the world’s largest corporate holder of bitcoin. Chanos wagered that the stock was wildly overvalued compared to the bitcoin it actually owned, and after a 50% plunge in Strategy’s share price from its 2025 peak, that bet has paid off.

A bit of context: In 2020, Michael Saylor turned Strategy into the first “digital asset treasury” (DAT) after deciding the struggling software firm should just buy and hold bitcoin indefinitely. It was a bizarre but brilliant move: with no spot bitcoin ETF at the time, investors desperate for crypto exposure piled in, happily paying a premium just to own a stock that held bitcoin. Last November, investors were paying $2.50 for every $1 of bitcoin the company kept in its coffers.

That trade could only work as long as crypto kept climbing—and for most of the year, it did. Fueled by friendlier regulations under a pro-crypto Trump administration and growing institutional demand, digital assets soared. Strategy rode the wave, rising more than 1,000% over the past five years, roughly double bitcoin’s gain over the same period.

But momentum can reverse fast in the world of crypto. Bitcoin just had its worst week since March, tumbled below $100,000 for the first time since June, and wiped out nearly $300 billion in market value by Friday afternoon. Other major tokens followed suit, dragging the broader crypto market sharply lower.

The sell-off hit DATs especially hard: since their business models are effectively leveraged bets on crypto prices, they sink even faster when bitcoin falls. Strategy, once valued at about $128 billion in July, is now worth roughly $70 billion, erasing nearly half its market cap in a matter of months.

Is DAT done for?

Still, opinions on what comes next are split. After a 20% slide from its peak in October, bitcoin is still up about 13% in 2025. Analysts warn the pain might not be over yet, with some saying there’s a “high probability” bitcoin could fall below $60,000 if it stays under key support levels.

Others aren’t so pessimistic: Many see the October sell-off as a needed cooldown that cleared out excess leverage while leaving fundamentals in place. Cathie Wood, for one, is sticking to her call that bitcoin will hit $1 million, assisted by the rapid growth of stablecoins, which recently topped $300 billion in total market value. She also argued bitcoin could mirror gold’s rise and eventually capture a meaningful share of its market cap.

What happens next will hinge on whether or not bitcoin finds its footing. For now, DAT investors might want to tread lightly.—SY