Bitcoin's Treasury Shows Signs of Ruin: One Quarter of Companies Worth Less Than Their Cryptocurrency Holdings
In the rapidly evolving world of cryptocurrency, a notable trend has emerged: a significant number of publicly traded companies holding substantial Bitcoin reserves are trading at a discount to their digital assets. This phenomenon, known as the "Market-to-Net-Asset-Value" (mNAV) ratio, has seen some companies' mNAV fall below one, indicating that their market capitalization is less than the value of the Bitcoin they hold.
However, this trend does not apply to all companies. Those whose core operating business directly benefits from high Bitcoin holdings may still trade at a premium. For companies acting as Bitcoin accumulation vehicles, analysts like Lunde argue that they should not trade at a premium due to costs for advisors, management, and complex capital structures.
The average mNAV multiplier in the sector remains high at 2.8, but smaller companies are increasingly going underwater. Meanwhile, only the largest players still show significant premiums. This shift suggests a potentially lower demand from one of last year's major buyers, MicroStrategy, whose numbers indicate a significantly lower demand.
Prominent names like Twenty One, backed by Tether, and Semler Scientific are now trading below the value of their Bitcoin holdings. This trend is not unique to these companies; NAKA, a merger vehicle of KindlyMD and Nakamoto Holdings, has lost 96% from its record high, with the mNAV multiplier collapsing from an incredible 75 to just 0.7.
Even the industry heavyweight, MicroStrategy, is feeling the headwind. The premium over the Bitcoin value has fallen to 1.26 - the lowest level since March 2024. This decreased premium may signal a shrinking room for MicroStrategy to finance new Bitcoin purchases via the stock market.
Despite these challenges, the market seems to be emancipating itself from artificial demand through corporate balance sheets and returning to more organic demand from ETFs and retail investors. This shift could be a sign of a more rational market correction, as analysts like Lunde view it.
In a notable move, the publisher Boersenmedien AG's management and majority shareholder, Mr. Bernd Foertsch, has entered positions in Bitcoin, indicating a growing interest in cryptocurrency among traditional financial players.
When companies are trading below their net asset value, new share issuances become dilutive, meaning the company would be giving away more ownership shares than it receives in value from Bitcoin. This dynamic could potentially lead to financial bottlenecks for future Bitcoin purchases, but no specific companies have been identified as suffering such issues based on the available information.
In conclusion, the trend of companies trading at a discount to their Bitcoin reserves is a significant development in the cryptocurrency market. As the market corrects and becomes more organic, it will be interesting to see how companies adapt and whether this trend continues. For those considering investing in Bitcoin, AKTIONÄR's long-held opinion remains: it is better to invest directly in Bitcoin than in Treasury companies.
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