CoinShares: Этап подражателей в мире криптоказначейств завершен Translation: CoinShares: The Imitation Phase in the World of Crypto Treasuries is Over

The bubble of companies holding treasuries in Bitcoin and other cryptocurrencies (Digital Asset Treasury — DAT) has largely collapsed. This view was expressed by James Butterfill, head of research at CoinShares.

In August 2020, Strategy became the first publicly traded firm to announce the inclusion of digital gold in its balance sheet. The initiative’s primary goals were stated as asset diversification and currency risk management.

«It also corresponded with the growing interest from many corporations in distributed ledger technology and the potential efficiency gains from integrating blockchain infrastructure into existing operations,» Butterfill noted.

In practice, the strategy from Michael Saylor’s company turned into an investment approach in cryptocurrency using borrowed funds. Many new entrants in the sector followed a similar path, issuing shares not to advance their businesses but to accumulate more digital assets.

«However, this led to a decline in interest and capital inflow into the sector, while casting doubt on the sustainability of such strategies,» Butterfill emphasized.

As a result, treasury companies began to tap into as many funding sources as possible to quickly increase their stash of coins, hoping that rising prices would offset the downturn’s effects.

The correction in the cryptocurrency market revealed structural flaws in DAT, according to Butterfill.

The dwindling investor interest was fueled by a lack of operational cash flows.

For many treasury firms, their traditional business models are generating losses. Though these amounts are relatively small compared to their crypto reserves, they can exert selling pressure on digital assets, the expert noted.

In an environment of liquidity scarcity, the need to pay dividends and interest could lead to the urgent liquidation of cryptocurrency holdings. Most DAT attracted funds through share issuance, so their debt burden is not overly large.

An exception is Strategy, which has outstanding loans totaling $8.2 billion and issued preferred shares with dividends amounting to $7 billion. In total, this represents about $800 million in annual obligations for the firm. To cover these payments, the company has already created a fiat reserve of $1.44 billion.

A much more significant question at CoinShares is what will happen when the mNAV (market net asset value) of sector participants falls below 1. This metric compares a company’s market capitalization with the value of its crypto reserves.

«Has the DAT bubble already burst? In many respects, yes,» Butterfill wrote.

During the summer, shares of many sector representatives traded at premiums of 3x and even 10x. However, the median mNAV has now dropped below one. As of the time of writing, Strategy’s mNAV stands at 1.16.

At CoinShares, they see two primary scenarios unfolding:

«We lean toward the latter scenario, especially considering the improved macroeconomic situation and the possibility of a rate cut in December, which will overall support the markets,» Butterfill noted.

Additionally, companies with a negative mNAV premium may become attractive acquisition targets for more stable competitors, he added.

«The end of the DAT bubble does not imply the failure of the treasury concept. Instead, we anticipate a redefinition,» Butterfill emphasized.

Experts at CoinShares expect the sector to move toward clearer categorization, with investors increasingly focusing on participants with specific strategies:

Another group comprises corporations that utilize Bitcoin as a form of macro-hedging but are not seeking to be classified as DAT. Existing examples include Tesla, Trump Media, and Block.

It’s worth recalling that JPMorgan analysts linked the short-term outlook of Bitcoin with the financial stability of Strategy.

In November, investors suspected the bank of coordinating an attack on the company.