DAT Sector Faces "Death Spiral" as mNAV Metric Crumbles

NYDIG has called on Bitcoin treasury companies to abandon the use of the market net asset value (mNAV) metric, which it argues is misleading and exacerbates systemic risks in the digital asset treasury (DAT) sector. The firm’s research highlights that mNAV—a ratio comparing a company’s enterprise value to the value of its cryptocurrency holdings—has become a flawed indicator of sustainability, particularly as market saturation and investor caution drive its compression. NYDIG’s global head of research, Greg Cipolaro, noted that the narrowing gap between stock prices and underlying crypto holdings has created a fragile environment, with factors such as investor anxiety over supply unlocks, corporate strategy shifts, and lack of differentiation among treasury strategies contributing to the decline.

The mNAV metric, once a key driver for DATs to issue new shares and expand crypto holdings, has faced significant erosion. Standard Chartered Bank reported that several high-profile DATs have slipped below the critical mNAV threshold of 1.0, effectively halting their ability to accumulate assets. This collapse has been attributed to market saturation, with Strategy Inc. (formerly MicroStrategy)’s Bitcoin-buying success inspiring over 89 imitators, many of which now struggle to maintain viability. The bank warned that consolidation is inevitable, with larger players like Strategy and Bitmine likely to acquire weaker firms trading at discounts.

The DAT sector’s reliance on mNAV has exposed structural vulnerabilities. When mNAV exceeds 1.0, companies can raise capital at a premium to buy more crypto, but this model becomes destructive once the ratio dips below parity. For instance, Strategy Inc.’s mNAV ratio declined from over 6.0x in 2021 to under 2.0x by mid-2025, reflecting eroding investor confidence and dilution pressures. Ethereum-based treasuries, however, have shown relative resilience due to staking yields, which provide additional income streams. This divergence underscores the importance of yield-generating strategies in sustaining DAT viability.

NYDIG’s critique of mNAV aligns with broader industry concerns. Artemis Analytics data reveals a three-month decline in mNAVs for BTC, ETH, and SOL treasuries, reaching a September low. The collapse has triggered sharp stock declines, exemplified by KindlyMD’s NAKA shares, which plummeted 55% in a single day and 96% since May. Peter Schiff, a vocal critic of DATs, likened the model to “Ponzi schemes built on a pyramid,” citing NAKA’s collapse as proof of inherent risks. Meanwhile, MicroStrategy’s NAV compression has curtailed its Bitcoin purchases, with its multiple dropping from 1.75x in June to 1.24x in September.

The implications for the DAT sector are profound. Standard Chartered predicts that only a handful of companies will sustain mNAV premiums through disciplined execution and innovative strategies. NYDIG emphasizes that mNAV’s volatility undermines long-term value creation, advocating for a focus on Bitcoin-per-share growth and capital structure resilience. For example, Strategy’s “preferred equity only” model, which avoids debt maturities, is positioned to reduce refinancing risks in volatile markets. The firm’s acquisition of Semler Scientific in an all-stock deal, which added 5,816 Bitcoin to its treasury, illustrates a strategic shift toward consolidating holdings and optimizing capital efficiency.

Looking ahead, the DAT sector faces a critical juncture. While larger players with low-cost funding and staking yields are expected to dominate, smaller firms risk a “death spiral” as mNAVs remain depressed. NYDIG’s call to abandon mNAV underscores the need for transparency and robust capital models to navigate the sector’s maturation. As the industry grapples with regulatory scrutiny and market skepticism, the ability to balance crypto accumulation with operational resilience will determine which DATs thrive in the evolving landscape.