Crypto treasury model loses its edge as stock premiums fade: DWF
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
DWF Ventures reported that most digital asset treasury (DAT) companies no longer trade at premiums above the market value of their crypto holdings, losing the early advantage that helped them raise capital without diluting shareholders. Only four of the 20 largest DATs, including Bit Digital and Hyperliquid Strategies, consistently trade above their managed net asset value (mNAV). The report notes that DAT stocks generally underperform simply holding the underlying cryptocurrencies.
Why it matters
The fading premiums mean DAT companies face challenges in raising equity capital without diluting shareholders, potentially undermining their business model. This shift is significant for investors and the broader crypto market as it impacts the viability of crypto treasury strategies relying on equity premiums to expand holdings.
Key context
The crypto treasury model was popularized by Michael Saylor’s Strategy in 2020, attracting investor interest and driving premiums during Bitcoin rallies, such as in late 2024. Prior warnings from Standard Chartered and Galaxy Digital highlighted the risk of an mNAV collapse, which could lead to market consolidation and jeopardize the ability of DATs to fund more crypto purchases through share issuance.
Key numbers and entities
DWF Ventures; Bit Digital; Strive; Hyperliquid Strategies; BitMine; Michael Saylor’s Strategy; Sequans Communications, which recently sold its remaining 314 BTC; Standard Chartered; Galaxy Digital; Will Owens (Galaxy research analyst). Bitcoin’s price ranged from over $126,000 in October 2024 to under $60,000 before recovering to around $86,000.
What remains unclear
The report does not specify the outlook for DAT companies going forward or detail specific strategies they may adopt in response to the loss of equity premiums. It also does not quantify the scale of discounts for companies trading below mNAV or provide detailed explanations for investor reluctance to pay previous premiums.