Matthew Sigel from VanEck has raised concerns about the growing risk of capital erosion for Bitcoin treasury companies. This stems from firms issuing new shares near or below their Net Asset Value (NAV), which can dilute existing shareholders' equity.
Warning About Dilution Risks
Matthew Sigel from VanEck raises critical questions about the significant risk of capital dilution for companies holding Bitcoin. The issue arises from firms issuing new shares at prices close to or below their Net Asset Value (NAV), which can lead to a decrease in the value of shares for existing investors.
Proposed Investor Protection Measures
To protect investor value, Sigel recommends several tactical measures: * Pause ATM programs when shares trade under 0.95× NAV to prevent undervalued issuance. * Launch share buybacks to counterbalance dilution and maintain share value. * Conduct strategic reviews of capital allocation policies to ensure long-term alignment with shareholder interests.
Need for Smarter Capital Tactics for Bitcoin Firms
Bitcoin’s price swings add complexity to treasury management. When firms issue equity near NAV, they risk losing the premium that justifies holding Bitcoin on their balance sheets. By applying VanEck’s strategies, companies can build stronger capital structures, especially during market downturns.
VanEck's proposed measures can help firms maintain investor confidence and prevent excessive share dilution, which is crucial in today's volatile Bitcoin market.
