Bears Winning as ‘Meaningful’ Discount Emerges for 4 Bitcoin Treasury Firms: TD

Some Bitcoin treasury firms are losing their luster as share prices sag below a key threshold, TD Cowen analyst Lance Vitanza shared in a Tuesday note.

Among 13 Bitcoin-buying firms tracked by the investment bank, four are trading “at meaningful discounts” against the value of their respective crypto holdings, he said. Among them were Semler Scientific (-4%), Sequans (-25%), DDC Enterprise (-18%), and Bitcoin Treasury Corp (-18%).

To an extent, these firms are trying to emulate Strategy’s playbook. Like the largest corporate holder of Bitcoin, they typically measure success based on the amount of Bitcoin that they own per share. All four firms pivoted toward buying Bitcoin this year.

Together, these firms have accumulated $1.15 billion worth of Bitcoin, but shifting stock prices have constrained a go-to source of funding. They can no longer issue common shares to buy Bitcoin, and while capturing that premium, purchase the asset to increase Bitcoin per share.



Strategy, which owns $73.49 billion worth of Bitcoin, has never slipped below the threshold. Within the cryptosphere, that ratio is colloquially referred to as mNAV, or market-to-net-asset value. Still, at a 1.29x premium, Strategy’s mNAV was two basis points away from all-time lows on Tuesday, according to Bitcoin Treasuries.

“A lot of this is an attention game,” Carlos Guzman, a research analyst at market maker GSR, told Decrypt, suggesting that Strategy benefits from a first-mover advantage.

Strategy’s premium peaked at 3.1x in November—before the debut of most Bitcoin treasury firms. As that premium has shrunk, common issuance has grown less accretive, Vitanza noted. That has made it more difficult for Strategy to grow its Bitcoin per share.

Bitcoin treasury firms are known to experience outsized volatility, “and bears clearly having their day,” Vitanza said. Some stocks should realistically trade at a premium, he said, given their lack of fees, ability to take on leverage through cheap debt, and manage operating expenses.

Moreover, TD Cowen expects “a number” of existing Bitcoin treasury firms to outperform the underlying asset, Vitanza said, noting that some struggling ones will likely be acquired.

James Chanos is likely among the bears Vitanza pictured. In May, the famed short-short seller declared that he was betting on an increase in Bitcoin’s price and against Strategy’s shares. When he unveiled his trade, Strategy was trading at a 1.94x premium to its Bitcoin holdings.

On Monday, Bitcoin treasury firm Kindly MD saw its premium temporarily evaporate after its CEO, David Bailey, encouraged the company’s doubters to sell their shares. Trading on the Nasdaq under the ticker symbol “NAKA,” its stock crashed more than 54% on Monday to $1.26 a share. The drop came after a tranche of shares became freely tradable for certain investors.

Shares rebounded to $1.51 on Tuesday, a 21% increase, according to Yahoo Finance. But with a market cap of around $568 million, the company’s shares changed hands at a 1.004 premium to its Bitcoin holdings.

The market may be souring on certain Bitcoin treasury firms today, but broadly, an increase in the asset’s price could flip the script fairly quickly, GSR’s Guzman said.

“Excitement for Strategy has gone away, but then the market turns, and it comes back,” he said. “Even if we’re seeing like these discounts right now, it could easily turn around if there’s more excitement or a big rally in Bitcoin.”

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