Net Asset Value (NAV) and Market Net Asset Value (MNAV) are important metrics that determine the health of crypto treasuries, particularly regarding Bitcoin ownership.
Understanding Net Asset Value (NAV)
Net Asset Value (NAV) is the ratio between a company's net assets and the total number of outstanding shares. It can be calculated as follows:
NAV = (Total Bitcoin Holdings + Other Assets - Total Liabilities) ÷ Total Outstanding Shares.
This allows assessing the company's financial health based on its assets and liabilities. A higher NAV indicates that total assets exceed total liabilities.
Understanding Market Net Asset Value (MNAV)
Market Net Asset Value (MNAV) is used to assess the valuation of a crypto treasury, calculated as:
MNAV = Total Market Capitalization of the Treasury ÷ Net Crypto Holdings.
This metric helps understand whether a company is overvalued or undervalued in the market. An MNAV of 1 indicates that the company holds an equivalent amount of cryptocurrency at the current market price.
Comparison of NAV and MNAV
The main difference between NAV and MNAV lies in their purpose. NAV indicates the share value concerning a treasury's balance sheet, while MNAV reveals the ownership of crypto assets per dollar invested. MNAV is more suited for market evaluation as it reflects current asset values.
Both NAV and MNAV play key roles in assessing the health of crypto treasuries. While they may seem similar, their applications are significantly different, making them useful for various analytical aspects.
