Ethereum Treasuries In Trouble: 65% Of Firms Under mNAV

Data reveals a majority of the Ethereum treasury companies are trading below mNAV, showcasing the effect of the latest price crash.

Ethereum Treasury Firms Are Looking Unhealthy

In a new thread on X, Capriole Investments founder Charles Edwards has discussed some metrics related to Ethereum treasury companies. A treasury firm refers to a public corporation that has adopted a digital asset like Bitcoin or Ethereum as its reserve strategy.

The idea was popularized by Michael Saylor’s Strategy (formerly MicroStrategy), which pivoted to being a BTC treasury firm back in 2020. Since then, the company has grown into by far the largest corporate digital asset holder, with a whopping $47.54 billion invested.

Earlier, companies were looking at only the number one cryptocurrency as a viable reserve asset, but this year, there has been a rise in holders of ETH, the coin ranked just behind BTC.

The Ethereum treasury frenzy peaked in August, but since then, the growth rate attached to them has witnessed a slowdown, as the chart below shared by Edwards shows.

From the graph, it’s clear that the rate of change for Ethereum treasuries is positive even after the slowdown, suggesting that companies remain in net accumulation. This has meant that, despite the outflows that the spot exchange-traded funds (ETFs) have witnessed recently, institutional buying still remains above the cryptocurrency’s supply growth, although only just.

While corporate accumulation continues, the ETH treasury business model may not be working for a lot of the firms. As the analyst has pointed out, the majority of companies have an mNAV value less than 1.

mNAV, standing for Multiple of Net Asset Value, is a metric that compares the market cap of a treasury firm against the total value of its reserve assets. The indicator being below the 1 mark naturally implies the firm’s valuation is less than its treasury’s worth.

About 64.3% of all Ethereum treasury firms currently fall into this zone. “That means the treasury company picture is a lot more unhealthy for ETH than Bitcoin,” explained Edwards.

Clearly, ETH treasuries are coming under pressure, so are any of them reacting by selling? Data suggests not many, as the net buy/sell ratio related to them still remains strong.

That said, while almost all Ethereum corporate holders are still net buyers, the buy/sell ratio has started to show a decline as the asset’s price has experienced its recent bearish shift.

ETH Price

Ethereum plunged toward $3,000 on Sunday, but the coin has since seen a small jump back to $3,200.