The head of digital assets research at investment firm VanEck, Matthew Sigel, believes a bearish reversal for Bitcoin (BTC) would put the brakes on the rise of digital asset treasury (DAT) companies.
In an appearance on The Wolf of All Streets YouTube channel, Sigel says that DAT companies holding various altcoins are going to keep sprouting as long as the price of Bitcoin remains bullish.
“I think it will continue to the smaller cap coins until Bitcoin sells off. And then this stuff will close up completely… There will be no new companies. And then we will kind of play in the existing sandbox.”
According to Sigel, a Bitcoin sell-off could lead to the multiple of net asset value (MNAV) of some of the existing DAT firms trading below one. An MNAV below one suggests that the stock of the crypto treasury company is trading at a discount, while an MNAV above one suggests it is trading at a premium.
MNAV is calculated by dividing the crypto treasury company’s enterprise value and the net asset value of the digital assets in its balance sheet.
“I think some of those will go under 1x MNAV. Then there will be a bifurcation between who draws a line in the sand and says, ‘look, we’re not going to dilute below 1x MNAV, we may even buy back stock.’ Those will be the survivors. And some of the others might be acquired.”
Bitcoin is trading at $118,282 at time of writing, down by around 4% below the all-time high reached mid this month.
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