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Digital asset treasuries are facing increased strain following a significant decline in their market net asset values, or mNAVs, which raises concerns about their capacity to maintain ongoing cryptocurrency acquisitions, as noted by Geoffrey Kendrick, the head of digital assets research at Standard Chartered.
Publicly traded companies that maintain digital assets on their balance sheets, referred to as digital asset treasuries, or DATs, have experienced a drop in share prices in recent weeks as investors reevaluate the viability of their strategies.
Kendrick indicated that an mNAV exceeding 1 is crucial for DATs to grow their holdings, while values falling below this level indicate weaker balance sheets and the possibility of consolidation.
Differentiation among DATs
Kendrick mentioned that the current downturn might present opportunities for differentiation rather than indicating the demise of the sector.
Elements such as access to affordable funding, advantages of scale, and yield from staking or DeFi are anticipated to distinguish stronger entities from weaker ones.
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DATs focused on Ethereum are perceived as the most resilient, partly due to the fact that staking returns can directly improve mNAVs. Bitmine strategist Tom Lee has projected that staking alone could contribute 0.6 points to the mNAV of Ethereum-based DATs.
This situation places Ethereum vehicles in a more advantageous position compared to those primarily associated with Bitcoin or Solana, which do not possess similar yield mechanisms.
Implications for crypto markets
DATs collectively account for approximately 4% of Bitcoin, 3.1% of Ethereum, and 0.8% of Solana in circulation, making their stability a significant factor in driving crypto demand.
Kendrick stated that consolidation is more probable among Bitcoin treasuries, resulting in coin rotation rather than net new acquisitions. In contrast, Ethereum DATs are likely to continue accumulating, offering a stronger tailwind for ether prices compared to competitors.
Notable players in the sector include Bitmine, SharpLink, and The Ether Machine, all of which have garnered close attention from investors monitoring the intersection of corporate balance sheets and digital assets.
The post Digital treasuries under pressure but Ethereum stands strong – StanChart appeared first on CryptoSlate.
