Data shows that the majority of Ethereum treasury companies are trading below mNAV, showing the impact of the recent price crash.
Ethereum treasury companies appear to be unhealthy.
In a new thread on A finance company refers to a public company that has adopted digital assets such as Bitcoin or Ethereum as a reserve strategy.
This idea was popularized by Michael Saylor’s Strategy (formerly MicroStrategy), which turned into a BTC treasury company in 2020. Since then, the company has invested a whopping $47.54 billion, making it the largest corporate digital asset holder.
Previously, companies were only looking at the top cryptocurrency as a viable reserve asset, but this year the number of holders of ETH, the coin right behind BTC, has increased.
The Ethereum financial frenzy peaked in August, but has since seen its growth rate slow, as seen in the chart below shared by Edwards.
The data for the institutional buying related to ETH over the last few years | Source: @caprioleio on X
Looking at the graph, it is clear that the rate of change in Ethereum treasury has been positive even after the economic slowdown, suggesting that the company is maintaining net accumulation. This means that despite recent outflows from cash exchange-traded funds (ETFs), institutional buying is still higher than the supply growth rate of cryptocurrencies.
While corporate accumulation continues, the ETH treasury business model may not work for many companies. As analysts point out, most companies have mNAV values below 1.
The percentage of the companies that are trading below mNAV | Source: @caprioleio on X
mNAV stands for Multiple of Net Asset Value, and is an indicator that compares the total value of assets held and the market capitalization of treasury stock. If the indicator is below 1 point, it naturally means that the company’s value is lower than its own stock value.
Currently, approximately 64.3% of all Ethereum treasury companies fall into this area. “This means that the picture from financial firms is much more detrimental to ETH than to Bitcoin,” Edwards explained.
Clearly the ETH Treasury is under pressure, are any of them reacting by selling? The data shows that the net buy/sell ratio associated with them remains strong, so not by much.
Looks like the buy/sell ratio has seen a drop in recent days | Source: @caprioleio on X
In other words, almost all corporate holders of Ethereum are still net buyers, but the buy/sell ratio has started to decline recently as asset prices have taken a bearish turn.
ETH price
Ethereum plummeted to $3,000 on Sunday, but the coin has since risen slightly to $3,200.
The trend in the price of the asset over the last five days | Source: ETHUSDT on TradingView
Featured image from Dall-E, capriole.com, chart from TradingView.com
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