The digital asset treasury (DAT) sector is experiencing significant stress as key companies report market-to-net asset value (mNAV) ratios that have dropped below the critical threshold of 1.0. Recent data shows that BitMine and SharpLink Gaming’s mNAVs are now at 0.99 and 0.89, respectively. This decline poses a serious threat to the capital-raising capabilities of these firms, particularly through at-the-market equity programs, and could lead to painful share dilution.
As Ethereum makes modest gains this week, the broader interpretation of declining mNAVs raises concerns among experts regarding future capital inflows for DAT companies. mNAV is an important metric that compares a company’s stock value to its tangible assets, and for DATs, this often hinges on the fluctuating value of their crypto treasuries. A report from Strategic ETH Reserve noted alarming trends, with BitDigital and GameSquare Holdings experiencing mNAV declines while still remaining above 1, at 1.51 and 1.13, respectively.
The decline in mNAV corresponds with the broader downturn in the cryptocurrency market, particularly with Bitcoin sliding from its mid-August high of $124,545.6 to around $112,154, as reported by CoinGecko. Companies like BitMine and SharpLink, which hold substantial Ethereum reserves—$8.3 billion and $3.7 billion respectively—are now grappling with an erosion of the market premium, complicating their ability to raise cash without penalizing existing investors.
Arthur Azizov, founder and investor at B2 Ventures, pointed out that the current investment climate reflects a hesitance among investors to pay premiums for Ethereum exposure, leading to stalled capital raises that were briefly robust earlier this year. For DATs, mNAV is essential for capital generation, particularly through ATM equity programs, as a premium over net asset value allows for stock issuance without diluting investor equity. As mNAVs contract, companies are forced to issue more shares to secure the same capital, resulting in unwelcome dilution for their stakeholders.
Regterschot of CryptoQuant noted that the selling pressure from continuous ATM share sales exacerbates mNAV declines, while the emergence of spot Ethereum ETFs offers direct competitor exposure without requiring the same premiums that DATs previously enjoyed. This environment intensifies the challenge, as enthusiasm for Ethereum diminishes against a backdrop of stagnant ETH/BTC price ratios, further contributing to a self-reinforcing cycle of declining premiums and increased share supply that dampens demand.
Looking ahead, the outlook for the fourth quarter appears critical for DATs. A resurgence in Ethereum’s performance could elevate mNAVs, permitting companies to raise funds more favorably and reinforce their ETH holdings, which would help restart growth trajectories. Conversely, should Ethereum’s price stagnate or the overall cryptocurrency market face bearish trends due to macroeconomic pressures, mNAVs could fall further, effectively inhibiting new equity issuance.
Experts agree that a strong performance in the upcoming quarter is essential. Without it, DATs may have to rely on revenue from staking yields, as net flows stall amid a tightened funding environment. The overall gravity of the situation signals that the next few months will be pivotal for the digital asset treasury landscape.
