VanEck’s Matthew Sigel, a digital asset research head, predicts a Bitcoin price drop could significantly impact the growth of digital asset treasury (DAT) companies.
A Bear Market Could Halt New Firms
Sigel believes the current boom in DAT companies, which hold various cryptocurrencies, is directly tied to Bitcoin’s price. As long as Bitcoin’s price stays high, he expects more of these companies to emerge, especially those holding smaller cryptocurrencies (altcoins). However, a Bitcoin sell-off would likely change everything. He predicts a complete halt to new company formations, leading to a consolidation of the existing players.
The Impact on Existing Firms
Sigel also anticipates that a Bitcoin downturn could cause the Multiple of Net Asset Value (MNAV) of some DAT firms to fall below one. An MNAV below one means the company’s stock is undervalued. He expects some companies to survive by refusing to dilute their stock below 1x MNAV, potentially even buying back their own stock. Others, he suggests, might be acquired.
Bitcoin’s Current State
At the time of writing, Bitcoin is trading slightly below its recent all-time high, experiencing a small dip.