Hyperliquid Strategies remains $356M in gains as losses drag down DAT firms

Amid the flood of negative sentiments hitting the crypto markets from every side and affecting different sectors, Hyperliquid Strategies continues to stay afloat, beating other companies like Bitmine and Strategy in terms of profitability. 

According to data from analytics firm Artemis, Hyperliquid Strategies has emerged as the leading digital asset treasury firm in terms of unrealized profits, with over $300 million in gains. 

Most other DATs are underwater, beaten down by severe market dips. Bitmine is currently taking the heaviest hit at over $7.5 billion in unrealized losses, while others like Saylor’s Strategy are also posting multi-billion dollar deficits. 

DATs absorb losses as downtrend persists

Hyperliquid Strategies is an outlier in the midst of what analysts are calling the first major stress test for DATs. They have attributed its profitability its more agile approach to the “Strategic Reserve” concept. 

The Hyperliquid franchise differs from many traditional DATs that simply hold BTC as a status balance sheet asset because it uses the $PURR ecosystem to navigate volatility. This active management system has helped it stay ahead of the curve by anticipating the liquidity needs of the mining sector and positioning itself accordingly, while BTC and ETH-linked DATs lose ground as their premiums evaporate. 

It is now AI versus BTC

One of the primary catalysts for the downward pressure on many DATs is the shift in BTC miner behavior. 

In the past, miners were the last bastion of defense; the HODLers of last resort, who retained a large amount of BTC as a signal of long-term belief. So, when recent data shows a dramatic reversal with miners now dumping their BTC holdings at rates not witnessed in years, it raises questions that need answering. 

However, rather than a loss of faith in BTC as an asset, experts suggest it is the evidence of a pivot towards a new, more exciting venture: AI expansion. 

There is an ever-increasing demand for high-performance computing and data centers, and mining giants have been liquidating their respective stashes to fund the massive capital undertakings required to make the pivot into AI expansion. 

As of February 27, Bitdeer, the Singapore-based BTC miner, claims to hold no BTC, having sold a total of 166 BTC while adding zero. Others like Cango Inc, Riot platforms and Terawulf have also been selling considerable amounts, all to finance their respective pivots to AI-linked endeavors. 

Cango reportedly completed another major sale this February, selling 4,451 BTC to repay a loan and fund its AI initiatives. Riot Platforms reportedly did the same thing last year, selling about $200 million worth of BTC to fund AI ambitions, and Terawulf has been shedding on a gradual basis as well. 

The selling pressure from the miner community has now formed a ceiling for BTC prices, with collateral damage affecting firms that adopted Strategy’s strategic reserve model. 

It is unlikely that the sell pressure from miners tapers off anytime soon as they continue to sell to satisfy their AI expansion obligations, and investors are starting to price this in. 

Meanwhile, the rest of the DAT sector is struggling to justify its treasury holdings as they wallow underwater, hoping for the next macro to gain another leg up. The fact that Hyperliquid Strategies has managed to stay afloat amid it all is proof of the success of its strategies. 

Join a premium crypto trading community free for 30 days - normally $100/mo.