Tag: contributions

Retail Investors in DAT More Likely to Lose Funds After $17B Market Wipeout: Bloomberg

The post Retail Investors in DAT More Likely to Lose Funds After $17B Market Wipeout: Bloomberg appeared com. The losses to the retail investors in these types of DAT structures could continue to rise as billions of dollars in crypto market value keep going. According to some recent estimates, more than $17 billion in value has been wiped out. DAT Strategies Leave Retail Traders Holding the Bag A Bloomberg analysis suggests that retail traders have witnessed lesser returns on investment due to the recent market changes. Already, investor trust is being shaken in these vehicles as Bitcoin fell below $100,000. Many DATs that once traded at a premium now trade below net asset value. “These structures can function like circular trades,” Chris Holland of HM said. “if liquidity is ever truly tested, retail investors may be left holding the losses the structure was meant to avoid,” he shared. According to 10X Research, retail investors have absorbed at least $17 billion in losses after investing in DAT equities modeled after Michael Saylor’s Strategy. Meanwhile, sponsors are increasingly turning to in-kind contributions. This is a system in which sponsors deposit their own tokens rather than raise fiat to buy on the open market. Usually, these tokens are unlisted or highly illiquid. This might start to shift how risk is allocated. Often, that which seems to be capital inflow is recycled. However, when the markets turn, the fallout could reach the shareholders, mainly the retail traders. Projects That Priced Out Their Public Backers One example of this is Flora Growth Corp. The company in September announced a $401 million DAT linked to Zero Gravity tokens. But only $35 million of that came in cash. The rest was made up of tokens valued at $3 each. After listing, those tokens dropped to nearly $1. 20. This undermined.