The landscape for crypto-focused public companies is evolving into a competitive arena where firms are increasingly vying for investor funds. A recent report from Coinbase, authored by head of research David Duong and researcher Colin Basco, emphasizes this shift, claiming that the era of easy gains and reliable multiple of Net Asset Value (mNAV) premiums has come to an end.
Duong and Basco characterize the current phase of digital asset treasuries (DATs) as a “player-versus-player” environment, where only strategically positioned companies are likely to thrive. They predict that the inflow of capital from these entities could potentially invigorate the crypto market and bolster returns for investors.
Despite this optimistic outlook, analysts have expressed concerns about the oversaturation of crypto buying firms, warning that many may struggle to survive in this competitive landscape. A report from NYDIG highlighted that numerous crypto treasury firms have experienced declines in value, even as Bitcoin has shown some gains.
The researchers noted that early adopters, particularly major Bitcoin holdings like Strategy, initially benefited from substantial premiums due to a scarcity of comparable entities. However, they pointed out that increasing competition, execution risks, and regulatory hurdles have led to a decline in mNAV values. They remarked that the previous scarcity premium is fading, indicating that the market for crypto treasuries has now reached a crucial turning point.
The successful operation of a treasury company in today’s climate, as stated in the report, now hinges more on execution, differentiation, and timing rather than merely imitating the strategies of early adopters like MicroStrategy.
In a separate analysis, Coinbase’s researchers tackled the so-called “September effect,” which suggests that Bitcoin tends to decline during this month. Historically, Bitcoin has seen a downturn in September for six consecutive years from 2017 to 2022, leading to widespread belief that it is not an ideal time for risk-holding. However, Duong and Basco caution against relying on this seasonal trend as a trading indicator, noting that those who traded on this assumption in 2023 and 2024 would have been incorrect. They argue that seasonal timing is not statistically reliable for predicting Bitcoin’s monthly returns.
Looking forward, Duong and Basco forecast that the Federal Reserve is likely to cut interest rates during their upcoming meetings, suggesting that such actions could support a continuing crypto bull market in the early fourth quarter. They indicated that Bitcoin might benefit from macroeconomic conditions, including rising inflation, which saw a 0.4% increase in August, reaching 2.9% over the past year.
Market expectations point toward a potential reduction of 25 basis points in rates both next week and in October, which historically has positively influenced crypto and other risk assets. Coinbase’s researchers maintain a positive outlook for the crypto markets, anticipating continued support driven by robust liquidity, favorable macroeconomic conditions, and positive regulatory developments.
