Could Bitcoin/Ethereum Treasuries' NAV Flip Negative?

Why this report matters

Crypto equities are trading at levels few expected just months ago. The same sentiment premium that once inflated valuations is now quietly compressing, with NAV multiples slipping closer to parity. Investors who thought they were buying growth exposure may now realize they were paying 2–10x for the same underlying Bitcoin or Ethereum.

Is MicroStrategy (RHS) pulling Bitcoin (LHS) lower as the NAV compresses?

Volatility, the fuel that once justified those premiums, is fading, leaving many treasury companies exposed. The question is no longer whether these stocks can rally, but whether they can even sustain their NAV. Our $112,000 target is still within reach (see report), but unless Bitcoin reclaims $117,000, consolidation will persist.

Main argument

If compound interest is the most powerful force in the universe, then separating fools from their money is Wall Street’s. Since 2023, we’ve argued that MicroStrategy has been highly sophisticated in extracting a net asset value premium from the market, with the past 18 months showcasing financial engineering at its finest.

We turned bullish on October 7, 2024, when shares broke above $177. Still, as the stock surged past $400, we cautioned that declining Bitcoin volatility would curb MicroStrategy’s ability to raise capital and inflate its NAV. Although the stock repeatedly bounced off the $360 support level, it has now broken down decisively, falling 10% since we issued a fresh short call just two days ago (see report). The market is beginning to ask the uncomfortable question: could crypto treasury companies trade at a discount, or even a negative NAV?

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