Bitwise Asset Management ($BITW) CIO Matt Hougan says most digital asset trusts (DATs) are headed for discounts rather than premiums, as trading volumes slip and regulatory scrutiny intensifies. The forecast surprised crypto investors after DATs like Grayscale’s GBTC once traded at 30% premiums. What’s driving the reversal?
Bitwise CIO Says Most DATs Face Widening Discounts
On November 23, Bitwise CIO Matt Hougan told Bloomberg that most digital asset trusts (DATs) are now trading at considerable discounts, a stark contrast to the premiums seen throughout 2021 and early 2022. The Grayscale Bitcoin Trust ($GBTC) discounted as low as 2.4% to net asset value (NAV) this quarter, per CoinMarketCap data as of November 20, 2025. Smaller DATs, such as the Bitwise 10 Crypto Index Fund ($BITW), routinely trade at double-digit discounts; in October, $BITW’s market price dropped to $49, while NAV held at $57.05, marking a 14.1% discount based on SEC filings.
Trading volumes for DATs tracked by Bloomberg have fallen 38% year-over-year in 2025, reflecting declining retail demand. According to Hougan, “the days of persistent premiums for DATs are largely over as market mechanisms and new structures—such as spot ETFs—offer better access and tighter pricing.” The launch of Bitcoin spot ETFs in January 2025 triggered a rebalancing among institutional investors, with more capital flowing out of legacy DATs and into the lower-fee ETF products, according to data from BlackRock’s ($BLK) reports. The shift is also contributing to wider discounts across most DAT vehicles.
Crypto Market Feels Pressure From Regulatory and Structural Changes
The migration from DATs to ETFs marks a pivotal evolution in crypto investment vehicles. In Q3 2025, aggregate assets under management (AUM) for U.S. DATs dropped to $31.7 billion—a 25% decline from $42.4 billion in Q4 2024, per Reuters. The approval of spot Bitcoin ETFs by the SEC early this year led to significant outflows from trusts like $GBTC and $BITW.
Additionally, regulatory scrutiny has ramped up. In September, the SEC initiated a new review process for all crypto-based trusts, focusing on disclosure practices and secondary market liquidity. This change, coupled with a 12-basis-point fee reduction by major ETF issuers such as Fidelity and BlackRock, has forced DATs to reevaluate their fee structures and transparency measures.
The trend has reverberated sector-wide. According to CoinShares, average DAT discounts widened from 2.1% in January 2025 to 9.4% by November, with mid-cap altcoin DATs facing the steepest discounts. Analysts at JPMorgan note that “institutional adoption is gravitating toward the more liquid, regulated ETF market,” further squeezing DAT valuations.
DAT Discount Trends Create Opportunities and Risks for Investors
For investors tracking cryptocurrency market trends, the discounts present both arbitrage opportunities and conditional risks. Sophisticated investors look for periods where DAT discounts exceed 10%, potentially allowing for high-upside NAV convergence trades. Yet, such plays rely heavily on timing and regulatory changes that could affect conversion rules or primary market access.
Retail investors must beware of liquidity risks: in October 2025, the average daily trading volume of DATs plummeted to $56 million—from $91 million a year prior, per exchange data compiled by SEC reports. This drop can translate into larger bid-ask spreads and increased difficulty for investors seeking to exit positions rapidly.
Institutional players are rapidly reallocating toward ETFs, as highlighted in a Wells Fargo report showing $3.2 billion in outflows from DATs in Q1 and Q2 of 2025, versus $5.7 billion of inflows into crypto ETFs.
For those considering a tactical entry, it is essential to review transparent NAV reports, understand conversion or redemption policies, and monitor regulatory updates covered in financial news analysis and SEC communications. Meanwhile, traders hunting for market inefficiencies should track daily deviation data and broader market insights before acting.
Analysts Warn of Prolonged DAT Discounts Amid Structural Shifts
Market strategists point to several factors supporting the persistence—and potential widening—of DAT discounts well into 2026. In recent reports, Bernstein analysts emphasized the rapid commoditization of crypto exposure, with ETFs offering similar portfolio utility at lower costs. This dynamic, according to a September 2025 Goldman Sachs note, drives a “structural migration” away from trusts, fundamentally altering supply-and-demand for DAT shares.
Additionally, the uncertain regulatory environment has cooled retail participation, as SEC proposals could further restrict redemption or secondary trading. CFRA analysts identify ongoing tax complexity for non-ETF DAT investors as an additional headwind, potentially exacerbating discounts.
Lastly, the launch of blockchain-based ETFs in Europe and Asia—approved by the UK’s FCA and Singapore’s MAS—has expanded options for global investors, draining capital from U.S.-centric DATs. While some see the deepening discounts as eventual catalysts for DAT-to-ETF conversions or mergers, most analysts surveyed by Reuters in October anticipate “persistent discounts through at least mid-2026.”
Why Most DATs Are Headed for Discounts, Not Premiums in 2025
The prediction that most DATs are headed for discounts—not premiums—reflects clear market, regulatory, and technological shifts. With trading volumes shrinking 38%, median DAT discounts widening to 9.4%, and ETF products attracting billions in flows, investors must recalibrate strategies. Staying proactive about fee structures, redemption rules, and liquidity risks will be critical. According to Bitwise, those monitoring how “DATs headed for discounts” play out in the next year may find both cautionary and tactical opportunities as the structural overhaul unfolds.
Tags: digital asset trusts, DATs headed for discounts, crypto ETFs, GBTC, BITW
