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New York Digital Investment Group (NYDIG) has issued a stark warning to digital asset treasury (DAT) firms, predicting a "bumpy ride" ahead as the premiums on their shares narrow. This trend, observed even as Bitcoin reaches new highs, is attributed to a confluence of factors including investor anxiety over upcoming supply unlocks and shifting corporate strategies.
Key Takeaways
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Premiums for digital asset treasury firms are falling, with potential for further decline.
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NYDIG advises these firms to reserve funds for share buybacks to support their stock prices.
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Bitcoin holdings by public companies have peaked, but the pace of new purchases is slowing.
Narrowing Premiums Signal Trouble
Greg Cipolaro, NYDIG's global head of research, highlighted that the gap between the stock prices and net asset values (NAV) of major Bitcoin-buying firms like Metaplanet and Strategy is compressing. This compression is driven by several forces, including investor concerns about forthcoming supply unlocks, changes in how DAT management teams are approaching their objectives, increased share issuance, profit-taking by investors, and a lack of differentiation among various treasury strategies.
Crypto treasury firms have seen significant investor interest over the past year, attracting billions of dollars. Investors typically assess these firms by comparing their share prices to the value of the assets they hold. Cipolaro suggests that a "bumpy ride may be ahead" as many of these companies are awaiting mergers or financing deals, which could trigger substantial selling from existing shareholders. He noted that some companies, like KindlyMD and Twenty One Capital, are trading at or below their recent fundraising values, a situation that could worsen selling pressure once shares become freely tradable.
Strategic Advice for Treasury Firms
To counteract falling share prices relative to NAV, Cipolaro recommended stock buyback programs as the most direct solution. These programs aim to boost share prices by reducing the available supply of shares. His primary advice to DATs is to "save some of the funds raised aside to support shares via buybacks."
Shifting Dynamics in Bitcoin Holdings
According to a CryptoQuant report, the Bitcoin holdings of companies focused on acquiring the cryptocurrency reached a peak of 840,000 BTC this year. Strategy holds the largest portion, accounting for 76% of this total. While the number of monthly purchases has increased, the overall amount of Bitcoin acquired by these firms slowed in August, falling below the year's monthly average. Furthermore, these companies are now buying smaller amounts of Bitcoin per transaction.
For instance, Strategy's average purchase size decreased to 1,200 BTC in August, a significant drop from its peak of 14,000 BTC earlier in the year. Other companies saw an even more pronounced reduction in purchase size. This slowdown has impacted the growth rate of Bitcoin treasury holdings, with Strategy's monthly growth rate dropping to 5% in August, down from 44% at the end of 2024. Other firms experienced an 8% growth in August, a stark contrast to their 163% growth in March.
Bitcoin's price has remained relatively stable in the past 24 hours, trading around $111,200, but it has seen a 10.5% decline from its mid-August peak of over $124,000.
Sources
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Crypto Treasuries in for “Bumpy Ride” as NAV Premiums Drop, Cointelegraph.
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