Digital asset treasury (DAT) firms, publicly listed companies holding cryptocurrencies on their balance sheets, have experienced a significant downturn recently, with collapsing market net asset values (mNAVs) raising concerns about their sustainability. Standard Chartered analysts suggest that only the strongest of these firms will survive this period of market correction, and that Ethereum (ETH) treasuries are better positioned than Bitcoin (BTC) or Solana (SOL) treasuries to weather the storm.

Understanding the mNAV Collapse

The mNAV is the ratio of a company's enterprise value to its crypto holdings. A healthy mNAV, above 1, allows a DAT to issue new shares and continue accumulating digital assets. However, a decline below this threshold makes it difficult to raise capital and sustain growth. Standard Chartered reports that many DATs have recently fallen below this critical level, hindering their ability to continue buying. This decline is attributed to market saturation, growing investor caution, unsustainable business models, and the rapid expansion of ETH and SOL treasury strategies. The success of MicroStrategy's Bitcoin-buying strategy led to a proliferation of similar firms (89 imitators), contributing to market saturation and compressed valuations.

Differentiation and Consolidation

The collapse in mNAVs is expected to trigger differentiation and consolidation within the DAT sector. Geoffrey Kendrick, Standard Chartered's Global Head of Digital Asset Research, believes that success will depend on three key factors: funding, size, and yield. Firms with the ability to raise funds cheaply, larger companies, and those generating staking yields are more likely to maintain higher mNAVs.

Ethereum's Advantage

Standard Chartered suggests that Ethereum is likely to benefit more than Bitcoin or Solana from the rise of DAT companies. While DATs already hold significant portions of each cryptocurrency (4% of BTC, 3.1% of ETH, and 0.8% of SOL), Ethereum and Solana treasuries should command higher mNAVs because they generate staking yields. Kendrick notes that Ethereum is better positioned than Solana because ETH treasuries are more established. Ethereum treasury companies hold nearly 5 million ETH, roughly 4.1% of the circulating supply. This rivals U.S.-listed spot ETFs, which collectively manage 6.69 million ETH, or 5.5% of the supply.

The Future of DATs

Despite the recent challenges, Standard Chartered believes that DATs remain "selectively investible," particularly as a way to access digital assets in jurisdictions with restricted direct exposure. Performance is expected to diverge based on funding, size, and yield. The ability to raise funds cheaply, achieve scale, and generate yield through staking will be crucial for survival.

Risks and Opportunities

The treasury model, once seen as a major driver of institutional capital into crypto, is showing cracks. Falling share prices, weakened fundraising, and dilution risks expose fragility in the model. Some critics have even labeled the treasury play a Ponzi-like scheme, suggesting only strong firms with robust risk controls can survive. Investors are advised to diversify their crypto exposure, monitor mNAV thresholds, and prioritize operational fundamentals over speculative financial engineering. While challenges remain, Standard Chartered maintains a positive outlook on the medium-term growth potential of digital assets, citing the continued inflow of institutional funds and the development of crypto-friendly policies.