A trend is emerging among Bitcoin treasury firms, with a noticeable number trading at discounts relative to their Bitcoin holdings. In a recent analysis, TD Cowen’s Lance Vitanza pointed out that four out of the 13 Bitcoin-buying firms they monitor are currently undervalued. Semler Scientific, Sequans, DDC Enterprise, and Bitcoin Treasury Corp are all experiencing significant discounts, ranging from 4% to 25%.
These firms aimed to replicate the success of major players in the market, particularly Strategy, the largest corporate holder of Bitcoin. Strategy has maintained its value per share based on Bitcoin holdings without slipping below a critical threshold, known as market-to-net-asset value (mNAV). As of Tuesday, Strategy’s mNAV stood at a 1.29x premium, only slightly above its historical lows.
Investment trends suggest that these Bitcoin treasury firms, which have collectively amassed around $1.15 billion in Bitcoin, are facing challenges. Shifting stock prices have hindered their ability to issue common shares to finance further Bitcoin purchases. This situation contrasts sharply with Strategy, which has historically experienced a steady premium that peaked at 3.1x in November. As the premiums decrease, the viability of issuing shares to buy more Bitcoin has diminished.
Vitanza characterized Bitcoin treasury firms as particularly vulnerable to market volatility, indicating that the current bearish sentiment could persist. He also noted that some firms are better positioned for growth due to lower fees, access to cheap debt, and effective expense management. TD Cowen predicts that while several struggling firms might face acquisition, others could outperform Bitcoin itself.
This market uncertainty became even more apparent with the recent performance of Kindly MD, which saw a drastic 54% drop in share price after its CEO invited skeptics to divest their shares. The stock rebounded slightly the following day but still showed signs of volatility, reflecting broader market sentiments.
Despite the current downturn, analysts like GSR’s Carlos Guzman emphasize that the fate of Bitcoin treasury firms can change rapidly. If Bitcoin’s price begins to rise, the market landscape could shift favorably for these companies, reigniting interest and potentially reversing the discounts they’re currently facing.
