For Crypto Treasury companies, there will be no more profits, and only those with strategic discipline could survive the new stage of competition, Coinbase warns.
Coinbase Institutional is over the era of easy profits for digital asset financing companies (DATS).
According to a report written by Coinbase Institutional’s global research director David Duong and Research Associate Colin Basco, the industry is currently entering the highly competitive “player vs. player” phase as “the DAT phenomenon has reached a critical inflection point.”
Like Michael Saylor’s strategy, only the first movers benefited from a significant premium in Market Net Asset Value (MNAV), the report claims. But intensifying competition – the rise in DAT trends this year – as well as regulatory constraints and execution risks “contributed to MNAV compression.” In the case of data, MNAV refers to the ratio of a company’s total market capitalization to the value of its crypto-holding.
“In our view, the rarity premium that benefited early adopters has already been dissipated,” Duon and Basco wrote in their report.
Analysts consider the current phase as neither early nor late in the cycle, and the report says technical demand from these vehicles for stockpile assets will continue to support the market.
Only the most discipline survives
Data from the Strategic ETH Reserve shows that several ETH financing companies are already trading below MNAV. In other words, the value of a company’s cryptocurrency holds exceeds the company’s market capitalization. Of the 17 public companies that have the ETH Treasury, four public companies, including Sharplink and Ether Machine, already show negative MNAV.
Despite the negative MNAV, some cryptocurrency companies are signaling plans to double their holdings. Reports show that Sharplink sent over $1 billion in Stablecoins to Galaxy Digital on Thursday, September 11th, but will then transfer funds to Binance to buy more ETH.
Currently, Coinbase Institutional says that only the “most disciplined and strategically placed” players will survive.
Some people in the Crypto community are already thinking about how much DAT can push its competitiveness. Mert Mumtaz, CEO and co-founder of blockchain RPC platform Helius, was proposed earlier this week in X-Post, prompted by X-Post (USDH bid Frenzy).
Coinbase is not the only company at risk around DAT play in the current market. As Defiant reported last month, Galaxy Digital previously warned that a wave of companies building up crypto on its balance sheet increased market risk, drawing comparisons with the mutual fund boom of the 1920s, and ultimately contributed to the 1929 market crash.