Pantera Capital Backs Digital Asset Treasury Firms As Emerging Frontier For Crypto Exposure
In Brief
Pantera Capital backs DATs as emerging public market crypto exposure, adopting MicroStrategy’s permanent capital model with growing conviction and targeted investments.
US-based venture capital and hedge fund firm, Pantera Capital has identified Digital Asset Treasury companies (DATs) as an emerging segment for public market cryptocurrency exposure. These companies follow a model similar to MicroStrategy, utilizing permanent capital vehicles listed on public stock exchanges to provide access to digital assets. After thorough analysis, Pantera Capital has developed confidence in this investment approach and has made focused investments accordingly.
The firm emphasizes the importance of challenging existing assumptions and notes that the ongoing premium observed in MicroStrategy’s stock, along with endorsement from fundamental investors such as Capital Group and Norges, motivated them to explore asymmetric opportunities within the DAT sector. While the persistence of this premium is uncertain, there is a rationale for investing in Digital Asset Treasury companies, which may justify valuations above their underlying net asset value (NAV).
The core bullish argument suggests that shareholders can accumulate more Bitcoin per share (BPS) through MicroStrategy over time than by simply purchasing Bitcoin directly. This thesis rests on three conditions: first, stock prices can deviate from fair value, as markets may behave irrationally at times; second, MicroStrategy’s stock volatility enables the company to capitalize on this through convertible bond sales or by writing call options for premium income; and third, the company’s management possesses the financial expertise necessary to exploit these opportunities.
On a broader scale, an important factor contributing to the rise of DATs is their ability to merge traditional investor preferences with cryptocurrency exposure by effectively converting crypto holdings into equity-like instruments. The strong interest in products like MicroStrategy stock, related ETFs, and newer DATs indicates that a substantial amount of capital was previously deterred by the complexities associated with native crypto investments, such as wallet management and exchange accounts. The influx of capital through more familiar traditional channels is viewed as a positive development for the market.
From a supply perspective, DATs differ from ETFs in that investments in these vehicles tend to lock up digital assets for longer periods, as they operate similarly to closed-end funds with limited likelihood of selling the underlying coins. In contrast, assets held by ETFs may fluctuate more freely as investors buy and sell shares. This structural distinction may positively impact asset prices, both by increasing treasury Bitcoin holdings through DAT purchases and by reducing downward pressure from sales.
Pantera Capital Invests In Twenty One Capital, DeFi Development Corp, And Sharplink, Advancing Its Digital Asset Treasury Strategy
Pantera Capital holds positions in several DAT companies, with one of the most prominent being Twenty One Capital, led by Bitcoin advocate Jack Mallers. This company aims to replicate the MicroStrategy approach and is supported by notable industry entities including Tether, Softbank, and Cantor Fitzgerald. Twenty One Capital has reached a scale sufficient to utilize a broad range of capital market instruments while maintaining a relatively smaller market capitalization, which may allow it to grow Bitcoin per share (BPS) more rapidly than MicroStrategy and potentially justify a higher valuation premium. Pantera was the largest investor in their private investment in public equity (PIPE) offering.
Pantera also spearheaded the investment in DeFi Development Corp, which played a key role in initiating the DAT trend within the United States. Under the leadership of CEO Joseph Onorati and CIO Parker White, DeFi Development Corp applies the MicroStrategy model to the Solana ecosystem. Solana presents a compelling alternative to Bitcoin due to several factors: its earlier stage of development offers potentially greater upside; its higher volatility provides opportunities to capitalize on price fluctuations; the staking yield component supports growth in Solana per share; and there is comparatively less public market exposure, with no publicly traded miners or spot ETFs currently available.
More recently, Pantera invested in Sharplink Gaming, the first Ethereum-focused digital asset treasury company in the US. SBET is supported by Consensys, a leading Ethereum software firm with which Pantera has maintained a longstanding relationship spanning over ten years.
Pantera’s involvement in these firms, and other ventures, combined with their positive reception in the market, has helped spark interest in additional companies following the DAT model, many of which Pantera continues to assess actively.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
