Matthew Sigel, head of digital assets research at VanEck, highlighted potential troubles for companies holding Bitcoin treasuries and proposed strategies to navigate them.
Market Situation for Bitcoin Treasury Companies
In a recent post on X, Matthew Sigel noted that no public Bitcoin treasury company has traded below its net asset value (NAV) for a prolonged period. However, he indicated that one company is approaching break-even territory, presenting a rising risk for firms raising capital through large at-the-market programs to acquire BTC.
Potential Issues Trading at NAV
Sigel emphasized that if a company's stock approaches or falls below its NAV, it could lead to detrimental effects. Selling new shares in such scenarios can dilute the value for existing shareholders, which is concerning for investors. When stocks fall below NAV, offerings cease to create value and instead can destroy it.
Matthew Sigel's Recommendations
Sigel advised companies implementing Bitcoin treasury strategies to consider precautionary measures. He suggested pausing issuance if stocks trade below 0.95 times NAV for 10 or more trading days, and prioritizing buybacks when BTC appreciates if stock prices fail to reflect that value. Additionally, he mentioned potentially launching a strategic review, which could involve mergers or sunsetting the Bitcoin strategy. Sigel also highlighted the need for executive compensation to align with NAV per share growth.
Matthew Sigel emphasizes crucial aspects for cryptocurrency companies, stressing the need for disciplined management to protect shareholder interests.
