Crypto Treasury Firms Stare Down Leverage Crisis as NAV Discounts Force Risky Moves

ETHZilla has sold $40 million in Ethereum to fund stock buybacks amid a 30% NAV discount, highlighting growing distress in the crypto treasury sector. Meanwhile, Japan’s Metaplanet trades below its Bitcoin reserves, spotlighting escalating risks for the industry.

Analysts warn that crypto treasury firms face three dangerous options likely to fuel a sector-wide leverage expansion if market pressures continue.

Treasury Firms Confront Valuation Challenges

The Bitcoin treasury model faces new pressures as several firms fall below net asset value (NAV). Metaplanet’s modified Net Asset Value (mNAV) recently slipped to 0.99 despite 115.7% Bitcoin-related revenue growth in Q3.

While it has since recovered to 1.03, the decline marked an unusual scenario where the company’s market value went lower than its direct Bitcoin holdings.

Metaplanet mNAV. Source: Metaplanet Analytics

Since June, Metaplanet shares have plummeted about 70%, erasing the previous premium for the corporate Bitcoin treasury strategy. This mNAV inversion suggests declining market faith in Bitcoin-focused business models and raises key questions about their resilience under pressure.

Fidelity Digital Assets research indicates that non-mining public companies now hold over 700,000 BTC and 3 million ETH, a substantial concentration of these assets. Current conditions expose vulnerabilities in this approach to asset management.

Corporate Buying Pauses, Markets at Risk

Recent market analysis uncovers a notable lack of corporate Bitcoin purchases following drawdowns. Coinbase’s Head of Institutional Research, David Duong, points out that Bitcoin buying by treasury companies is near year-to-date lows, with no visible recovery during rebounds.

Where are the DATs? BTC digital asset treasury companies (DATs) have largely ghosted the post-Oct 10 drawdown and are yet to re-engage. Over the last two weeks, BTC buying by DATs fell to near year-to-date lows and has not meaningfully recovered, even on green days. A short