5th November 2025 > > Algorithmic stablecoins and DATs.

tl;dr

Sonos? Pah! Another algorithmic stablecoin crashes and burns, true to its destiny. DATs pose a risk to the downside.

Market Snap

Market Wrap

In rather exciting fashion, I had bids for BTC filled at both $101k and $99k yesterday. We saw two breaches of $100k though there didn’t seem to be much enthusiasm to stay below that level. However, with nearly $2bn of outflows in just five days from the spot BTC ETFs, further weakness is to be expected.

The speculators are running scared, as they always do, buying high and selling low. Investors with a long-term view and true conviction love to feast at times like these. In the same way you will never sell the top, you will never buy the bottom. As next May starts to loom large, with rate cuts and QE, disguised or otherwise, accumulating hard assets should be your priority.

Occasional Series – Sonos

You know how they say that there are only two good days of owning a boat? The day you bought it, and the day you sold it.

In The Wire, we are told you only do two days of prison – the day you go in, and the day you get out.

Sonos – a premium product that is supposed to enhance your listening experience – manages to combine the two.

The excitement of opening the parcel that contains this shiny, brand-new product is quickly demolished by the pain of getting it to work. Once you do, and that is going to take far more time than you ever imagined, it will randomly, and regularly, decide to no longer work. This has been happening for several years now for me. The pain of setting it up the first time is going to be endlessly repeated when the online help concludes by telling you to resort to going back to a factory reset.

Don’t get me wrong. They sound beautiful, and they look good. But needing a masters in IT to connect, and a PhD. in mechanical engineering to fix to the walls, seems a little overly complex to me.

Sonos is so bad, you only get one good day – that is the day you chuck it (and the £1,000 or so) in the bin.

NEVER, EVER buy anything branded Sonos, Ladies and Gentlemen.

Curious Cryptos’ Commentary – The second golden crypto rule

The first one is obvious (always buy BTC at five figures if you ever see that opportunity) but do you remember the second one?

All algorithmic stablecoins are destined to fail.

If you are doubtful about that, then we have more proof, as if that was needed.

Stream Finance (https://streamprotocol.money/) is a DeFi platform that utilises smart contracts to create yield for depositors. Headline rates of 18% for deposits of USDC and 12% for ETH attracted total assets of nearly half a billion dollars, which is far from shabby. But at the heart of the protocol is xUSD, an algorithmic stablecoin, which should scare the pants of any investors.

Yesterday, Stream Finance announced that an external TradFi investment manager has somehow “lost” $93mm of user assets, quickly followed by this announcement:

"Until we are able to fully assess the scope and causes of the loss, all withdrawals and deposits will be temporarily suspended. Any pending deposits will not be processed at this time."

xUSD depegged all the way down to 29c.

Now, in this example, the trigger for the depeg came from a TradFi problem, but that doesn’t make this piece of advice any less relevant:

Never get involved in any crypto ecosystem that uses algorithmic stablecoins.

Curious Cryptos’ Commentary – DATs

The explosive growth of DATs (Digital Asset Treasury companies) in 2025 always posed a risk to the crypto markets, and now we see why.

Sequans Communications has sold 970 BTC to redeem half of its convertible debt, leaving 2,264 BTC on the balance sheet.

Most DATs are trading at a discount to the market value of their crypto holdings, which is an uncomfortable position to be in. Interest payments on the debt raised to buy cryptos must be serviced, and for non-yielding cryptos like BTC you can easily see the problems that Sequans has been facing. As always with leveraged trades, the unwind happens at the worst possible time – leveraged players do not have the privilege of deciding their own exit timing when the market goes against them.

If more DATs follow suit, the drawdown will likely accelerate.