The boom in digital asset treasury (DAT) companies — fueled by the success of Strategy’s Bitcoin-buying — has shone a spotlight on cryptocurrencies such as Bitcoin, Ether and Solana. However, that spotlight has dimmed in recent weeks as the market net asset values (mNAVs) of many DATs collapsed, exposing smaller firms to growing risks, Standard Chartered warned Monday.
In the world of DATs, mNAV measures the ratio of a company’s enterprise value to the value of its cryptocurrency holdings. An mNAV above 1 allows a firm to issue new shares and keep accumulating digital assets. Below that threshold, it becomes far harder — and less prudent — to expand holdings.
Standard Chartered noted that several high-profile DATs have recently slipped below that critical level, effectively shutting off their ability to keep buying.
“The recent collapse in DAT mNAVs will likely drive differentiation and market consolidation,” the bank said. “Differentiation will favour the largest in breed, cheapest funders and those with staking yield” — a nod to big, liquid players like Strategy (MSTR) and Bitmine (BMNR), as well as firms able to raise money through low-cost debt.
The research tracked companies including Strategy, Bitmine, Metaplanet (MTPLF), Sharplink Gaming (SBET), Upexi (UPXI) and DeFi Development Corp (DFDV), highlighting how their valuations have compressed in recent weeks.
According to the bank, mNAV suppression is being driven by market saturation, growing investor caution, unsustainable business models and the rapid expansion of Ether (ETH) and Solana (SOL) treasury strategies.
“We see market saturation as the main driver of recent mNAV compression,” the analysts wrote, noting that Strategy’s success in acquiring Bitcoin (BTC) already spawned 89 imitators.
If mNAVs remain depressed, Standard Chartered expects consolidation across the sector, with larger players potentially scooping up weaker rivals. For example, Strategy could maintain its aggressive Bitcoin buying spree by acquiring treasury peers trading at discounts, the bank suggested.
Related: Strategy’s Bitcoin stash hits $73B with 638,985 BTC in treasury
Digital asset treasury companies face mounting risks
While several publicly listed companies have added cryptocurrencies to their balance sheets, digital asset treasuries have taken the approach further by making those holdings the centerpiece of their business strategy.
In addition to Standard Chartered, Cointelegraph has previously flagged the risks of this model, noting that some firms abandoned struggling core businesses to rebrand as crypto treasuries in an effort to ride the digital asset boom.
Venture firm Breed has also echoed those concerns. In June, the company cautioned that only a handful of Bitcoin treasury firms will likely escape a “death spiral” triggered by falling mNAVs.
“Ultimately, only a select few companies will sustain a lasting MNAV premium. They will earn it through strong leadership, disciplined execution, savvy marketing, and distinctive strategies that continue to grow Bitcoin-per-share regardless of broader market fluctuations,” Breed’s analysts wrote.
New York Digital Investment Group (NYDIG) has also highlighted the narrowing premiums of DATs, as the gap between stock prices and underlying crypto holdings continues to shrink.
The forces behind the compression include “investor anxiety over forthcoming supply unlocks, changing corporate objectives from DAT management teams, tangible increases in share issuance, investor profit-taking, and limited differentiation across treasury strategies,” said NYDIG’s global head of research, Greg Cipolaro.
Other observers draw sharper parallels. Josip Rupena, CEO of crypto lending firm Milo, compared DAT strategies to collateralized debt obligations — the complex financial products that helped trigger the 2008 financial crisis:
“There’s this aspect where people take what is a pretty sound product, a mortgage back in the day or Bitcoin and other digital assets today, for example, and they start to engineer them, taking them down a direction where the investor is unsure about the exposure they’re getting.”
Related: Mega Matrix files $2B shelf to build Ethena stablecoin governance treasury
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