Digital asset treasury (DAT) net asset value (NAV) is collapsing, but this is not as bad as it seems and can be seen as an opportunity for smart investors, according to 10x Research.
“The era of financial magic is coming to an end for Bitcoin treasury companies,” analysts at 10x Research said in a report shared with Cointelegraph on Friday.
“They conjured up billions of dollars of paper wealth by issuing stocks far above Bitcoin’s actual value until the illusion disappeared,” they continued.
In this “magic trick,” DAT essentially transferred wealth from retail investors who overpaid for stocks to actual Bitcoin (BTC) for the company. Shareholders lost billions of dollars, and management accumulated virtually BTC.
The researchers cited Bitcoin’s fourth-largest treasury firm, Metaplanet, as an example, saying the company effectively converted its $8 billion market cap, backed by just $1 billion in Bitcoin holdings, into a $3.1 billion market cap backed by $3.3 billion in Bitcoin holdings.
A similar situation for strategies
Retail investors paid 2 to 7 times the actual value of Bitcoin when buying these stocks during the hype. Now, those premiums have disappeared, leaving many shareholders dead in the water while companies convert their inflated capital into real Bitcoin.
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They noted that Michael Saylor’s strategy experienced a similar “boom-bust cycle in net asset value,” which resulted in a slowdown in Bitcoin purchases.
“Now that NAV has completely reversed, individual investors are losing billions of dollars, and many investors likely lack the conviction to continue adding to their positions.”
A new category of Bitcoin asset management companies
NAV normalization has created an unusual entry point for smart investors. Companies currently trading below NAV offer pure Bitcoin exposure with the option of future alpha generation and upside from trading profits.
This weeding out also separated actual managers from the marketing machine. The companies that survive this transition will be time-tested, well-capitalized, and capable of generating consistent returns, creating a new category of Bitcoin asset managers.
The researchers stated that DAT adapting now will “determine the next bull market” and concluded:
“Bitcoin itself will continue to evolve, and digital asset treasury companies with strong capital bases and trading-savvy management teams have the potential to continue to generate meaningful alpha.”
Strategy, Metaplanet stock falls
Strategy stock (MSTR) rose 2% on Friday, closing at $289.87. However, it is down 39% from its all-time high of $473.83, which closed in November 2024, according to Google Finance.
Metaplanet stock (MTPLF) fell to 402 yen ($2.67) on the Tokyo Stock Exchange yesterday, down 6.5%, and has fallen 79% since its mid-June high of 1,895 yen ($12.58).
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