Pantera analyzes two major trends: crypto asset treasury reserves and stablecoins

Organized & Compiled: Deep Tide TechFlow

Investment cases of cryptocurrency asset reserve companies

Author: Cosmo Jiang, General Partner

A new field of cryptocurrency investment is emerging in the public market - Digital Asset Treasury Companies, abbreviated as DATs. These companies provide investors with exposure to digital assets through perpetual capital instruments listed on public stock exchanges, adopting a strategy similar to MSTR, the predecessor of MicroStrategy. After a thorough analysis of the details of this strategy, we are confident in this investment concept and have made key allocations.

As investors, we are always committed to challenging our inherent biases. Given the persistent premium on MSTR stock, along with the participation of fundamentally-driven funds like Capital Group and Norges, we have identified asymmetric investment opportunities that leverage DAT trends. Although this premium may not last forever, investing in digital asset financial companies still has solid fundamental support, which also explains why their stock prices may be higher than their underlying net asset value (NAV).

In the long term, investing in MSTR could potentially provide investors with more Bitcoin per share than directly purchasing Bitcoin (BTC-per-share, BPS). Here is a simple calculation example:

If you buy MSTR at twice the NAV, it is equivalent to purchasing 0.5 BTC instead of directly buying 1.0 BTC on the spot market. However, if MSTR can increase its BPS by 50% annually through fundraising (it grew by 74% last year), by the end of the second year, you will have 1.1 BTC, which is more than just buying on the spot.

To believe that MSTR can continuously increase BPS, you need to meet the following three prerequisites:

Markets are not always rational, and stocks can trade at a premium above NAV. This is not uncommon in long-term markets.

The high volatility of MSTR stock creates conditions for it to obtain high premiums through the sale of convertible bonds or call options.

The management team possesses sufficient financial acumen to effectively leverage these market conditions.

From a macro perspective, the success of DAT lies in its combination of traditional investors' behavior with exposure to digital assets—essentially transforming cryptocurrencies into a stock-like format. The strong demand for MSTR, ETFs, and the new generation of DAT products indicates that many capital has previously failed to enter the market due to the complexity of crypto products (such as wallet setups or trading accounts). Now, even through the traditional financial system, this capital is starting to flow into the crypto space, which is undoubtedly a positive signal.

From the perspective of supply structure, there are significant differences between DAT and ETF: the funds invested in DAT are essentially "locked" because they are essentially one-way closed-end funds, with a lower likelihood of being sold off. In contrast, the cryptocurrencies held by ETFs can be easily bought or sold. This characteristic may have a positive impact on the price of the underlying assets, whether because DAT continually purchases more cryptocurrencies for its asset reserves or because they have a smaller impact on market sell-offs.

Pantera has invested in several digital asset financial companies (DAT), among which the most well-known is Twenty One Capital ( NASDAQ code: CEP).

Led by longtime Bitcoin advocate Jack Mallers, the company sought to replicate MSTR's successful model and enlisted the backing of three industry giants, Tether, SoftBank (Softbank), and Cantor Fitzgerald. Twenty One's modest size, its ability to take full advantage of the various instruments of the capital markets, and its small market capitalization and greater flexibility are expected to increase the growth rate of Bitcoin (BPS) per share faster than MSTR, thereby supporting its higher market premium. Pantera is the largest investor in its PIPE (Private Investment Public Equity), which generally refers to a form of financing that sells shares to institutional investors in a non-public manner to raise capital.

We also led the investment in DeFi Development Corp ( NASDAQ: DFDV, formerly known as Janover), which pioneered the DAT space in the United States. Led by CEO Joseph Onorati and CIO Parker White, DFDV's strategy borrows from MSTR but shifts the target asset from Bitcoin to Solana. As a potential alternative to Bitcoin, Solana has several unique advantages: (a) it is in the early stages of development, so it may have greater growth potential; (b) Its price volatility is higher than Bitcoin's, which means there are more opportunities to profit from volatility; (c) It supports staking (staking), i.e., earning additional income by participating in network validation, thereby promoting the growth of SOL per share; (d) The current market demand for Solana has not yet been fully unleashed, as there are few relevant alternative investment vehicles (such as publicly traded miners or spot ETFs) in the current market.

Our latest investment in this field is Sharplink Gaming (SBET), which is also the first Ethereum-based digital asset finance company in the United States. SBET is supported by Consensys, a leading software company in the Ethereum ecosystem, and Pantera has over ten years of collaborative experience with the Consensys team.

By investing in companies like DFDV, CEP, and SBET, as well as their successful performance in the market, Pantera has helped drive the emergence of a subsequent batch of similar enterprises. We are still actively evaluating other potential investment opportunities in this field.

Core value of cryptocurrency: US Dollar

Author: Erik Lowe, Content Manager

In our blockchain communication this January, we explored how cryptocurrencies could become an "unexpected answer to counter de-dollarization." With the smooth passage of the GENIUS Act in the Senate with bipartisan support, and the new government's continued focus on stablecoins supporting the dollar, we can see that blockchain is gradually being regarded as an important strategic tool to maintain the dollar's global dominance.

"As President Trump has instructed, we will ensure that the dollar continues to be the dominant global reserve currency, and we will achieve this through stablecoins." - Scott Bessent, U.S. Secretary of the Treasury, White House Cryptocurrency Summit, March 7, 2025

The introduction of the "GENIUS Act" provides a clear and comprehensive regulatory framework for stablecoins, instilling the confidence and standards that market participants lacked during the exploratory phase. This will undoubtedly further solidify the legitimate status of stablecoins as a "core application" in the cryptocurrency space.

How to promote the demand for the US dollar

Currently, one of the most practical applications of cryptocurrency is bringing the US dollar onto the blockchain. In the $250 billion stablecoin market, 98% of the market value is backed by fiat currency rather than relying on cryptocurrencies or algorithmic stabilization mechanisms. This indicates that stablecoins have become an important tool for driving demand for the US dollar, while also reflecting the practical value of blockchain technology in the financial sector.

As the global reserve currency, the US dollar accounts for 98% of the fiat-backed stablecoins, which is not surprising.

Blockchain technology is empowering the US dollar, enabling it to reach 5 billion smartphone users worldwide and achieving fast, low-cost programmable value transfer. In emerging markets, people can avoid the risk of local currency depreciation by holding dollar-backed stablecoins. Additionally, stablecoins offer immigrants a more economical way to send remittances, whereas traditional remittance companies may charge fees equivalent to a month's salary.

At the same time, stablecoins are becoming a global distribution channel for U.S. Treasury bonds.

In the current period where the U.S. fiscal health faces challenges to confidence, stablecoins have helped boost the demand for government bonds. In this context, geopolitical tensions and macroeconomic uncertainties have further intensified. The demand from traditional U.S. government bond buyers has decreased, leading to a rise in yields and a drop in bond prices in last week's 20-year bond auction due to weak demand.

Although the impact of stablecoins remains limited relative to the total amount of national debt held, stablecoins like Tether's USDT and Circle's USDC—backed by a total of $177 billion in government-related assets—are becoming a new source of demand. Together, they will become the seventeenth largest holder of national debt globally.

We believe that the ranking of stablecoins among government bondholders will continue to rise.

"It's a long-term prediction, but banks are like landlines and we don't need them anymore. Stablecoins will eventually replace the bank deposit function that we are used to. —Dan Morehead, Dubai, TOKEN2049, keynote, May 1, 2025

Strategic Synergy

The advancement of the "GENIUS Act" further clarifies the market's view: stablecoins are one of the most powerful applications in the cryptocurrency space, and they are also a strategic asset for safeguarding U.S. interests, from maintaining the global dominance of the dollar to supporting the Treasury market.

By encouraging responsible issuance and ensuring that stablecoins are backed by U.S. Treasury securities, the bill further strengthens the strategic alignment between cryptocurrencies and the U.S. dollar.