TD Cowen Trims Strategy Price Target as Bitcoin Yield Outlook Softens

TD Cowen analysts have reduced their 12-month price target on the hypothetical Digital Asset Yield Strategy Fund (DASY) from $15.00 to $12.50, citing a rapidly softening environment for generating sustainable passive income from Bitcoin holdings. The firm maintained an ‘Outperform’ rating but adjusted its financial modeling to reflect compressed profitability margins.

Analyst Steven Souzza noted in the research report that the primary driver for the price target cut is the normalization of on-chain activity following periods of elevated network congestion earlier in the year. ‘The supernormal transaction fee revenue generated during periods like the BRC-20 craze has subsided, resulting in lower expected mining and validator compensation,’ Souzza stated. ‘Furthermore, market saturation in decentralized finance (DeFi) lending protocols is driving yield compression, making high single-digit returns increasingly difficult to maintain without taking on disproportionate credit risk.’

TD Cowen’s revised forecast now models a conservative average yield generation of 3.5% annually for the underlying strategy, down from the previous expectation of 5.5%. This shift reflects regulatory uncertainty regarding offshore crypto lending activities and increasing centralization in staking pools, which traditionally offer higher returns but carry higher operational risk. The firm warned that investors should prepare for slower growth in asset managers focused solely on BTC yield optimization, advising clients to look for diversification into volatility trading and options-based strategies to supplement returns.

Source: TD Cowen Trims Strategy Price Target as Bitcoin Yield Outlook Softens