Key facts
- Most digital asset treasury (DAT) companies now trade below the value of their crypto holdings.
- Only four of the 20 largest DATs by assets under management trade above an mNAV of 1.
- Bit Digital, Strive, Hyperliquid Strategies and BitMine are the only DATs trading above an mNAV of 1.
- Since 2020, most DAT stocks have underperformed simply holding the underlying crypto asset.
- Sequans Communications sold its remaining 314 BTC, completing its exit from cryptocurrency holdings.
- The DAT model depends on a persistent equity premium to NAV to avoid diluting shareholders.
The crypto treasury model, which allowed companies to raise capital by issuing shares that traded at a premium to their underlying crypto holdings, has lost its effectiveness, according to a report by DWF Ventures. The model's success relied on investors paying a premium for exposure to cryptocurrencies through publicly traded companies, enabling these firms to acquire more digital assets without diluting existing shareholders. However, DWF Ventures found that most digital asset treasury (DAT) companies now trade at a discount to their net asset value (mNAV), meaning their market value is less than the value of their crypto holdings. Only four of the 20 largest DATs by assets under management currently trade above an mNAV of 1. This trend suggests a waning investor appetite for this investment vehicle. The report noted that since Michael Saylor's Strategy pioneered the model in 2020, most DAT stocks have underperformed simply holding the underlying crypto asset. Even for those that have outperformed, the advantage has generally been small. The report also highlighted Sequans Communications, a French semiconductor company, which has sold its remaining 314 BTC, completing its exit from cryptocurrency holdings. Standard Chartered and Galaxy Digital have also previously warned about the potential collapse of mNAVs and the critical dependence of the DAT model on a persistent equity premium to NAV.