KindlyMD CEO David Bailey says the initial hype surrounding companies with large Bitcoin reserves is fading as investors become more cautious. So far, Bitcoin treasury firms have seen their market net asset values (mNAVs) decline over the past few months.
“The market is becoming more sophisticated and learning how to evaluate the differences between financial companies,” Bailey said in an interview with CNBC on Thursday.
Only companies with unique capabilities can thrive today
bailey said Unless a Bitcoin treasury company offers something truly distinctive, there is little reason to launch. “It’s like, what’s the advantage? Why are you needed? Whenever there’s excitement in the market, you see good companies come out, but you also see bad companies come out,” he said. He added that the old strategy of copying existing Bitcoin bonds no longer works.
He also cited a variety of ways to differentiate, from expanding into undervalued international markets to focusing on specific asset types or adopting Michael Thaler’s credit markets approach, which involves acquiring and integrating revenue-generating companies.
However, his company’s stock price is volatile. Kindly MD fell 55% to $1.22 on Sept. 15 after Mr. Bailey warned the stock could see more volatility in the short term.
Standard Chartered has hinted at the possibility of industry consolidation
Bailey predicts that top-performing Bitcoin treasury companies will soon move to the “next stage,” creating a “healthier environment” for the industry. According to data from BitcoinTreasuries.NET, the treasury currently holds $113.8 billion.
Standard Chartered said in a September 15 warning that the collapse of the mNAV of several digital asset treasuries has left small and medium-sized businesses increasingly vulnerable to financial strain. At the time, the bank explained that continued declines in mNAV could trigger industry consolidation as major players move to acquire struggling rivals. He added that Strategy could extend its Bitcoin buying streak through such acquisitions.
Around the same time, venture capital firm Breed also warned that only a small number of Bitcoin treasury companies could prove to be resilient, and that companies trading close to their market value could end up in a “death spiral.” According to the firm’s analysts, companies that demonstrate solid management, consistent execution, sharp marketing, and a unique approach to driving Bitcoin per share growth despite market volatility are likely to earn a market NAV (mNAV) premium.
Earlier this week, Japanese Bitcoin treasury company Metaplanet entered uncharted territory as one of the world’s largest publicly traded holders of assets when its corporate value fell below the value of its Bitcoin holdings.
The market-to-NAV (mNAV) ratio, which compares the company’s value to its Bitcoin holdings, fell below 1 on Tuesday, reaching 0.99 for the first time in history, according to official data.
Metaplanet stock (3350) has lost 75% of its value, falling from a high of $13 per share to $3.20 per share on Tuesday, according to TradingView data, so the index has fallen more than 7 points since mid-June.
The company’s mNAV fell below 1 after Metaplanet suspended Bitcoin purchases for the past two weeks, with the latest BTC purchases announced at the end of September.
According to BitcoinTreasuries.NET’s mNAV page, unlike traditional net asset value (NAV), mNAV is a ratio of a company’s value to Bitcoin NAV and is intended to help investors determine how the market values a company relative to its underlying BTC holdings.
NYDIG Global Research Chief Greg Cipolaro also outlined some of the factors behind the decline in DAT premiums. These include investor anxiety about upcoming unlock events, changes in management focus, capital issues, profit taking, and minimal differentiation between financial strategies.
On July 4, Glassnode Principal Analyst James Cech stated that he believes the lifespan of Bitcoin financial strategies may be significantly shorter than expected. “For many new entrants, that may already be over,” he noted.
