Digital treasuries under pressure but Ethereum stands strong – StanChart

The financial health of digital asset treasuries (DATs) has come under intense scrutiny as market net asset values (mNAV) experience sharp declines across the sector. Geoffrey Kendrick, head of digital assets research at Standard Chartered, emphasizes that an mNAV above 1.0 is essential for these corporate entities to expand their cryptocurrency holdings. When mNAV falls below this critical threshold, it signals weakening balance sheets and potentially triggers consolidation within the sector.

Listed companies that have embraced digital assets on their balance sheets, including prominent players like Bitmine, SharpLink, and The Ether Machine, have seen their share prices decline significantly in recent weeks. This investor reassessment reflects growing concerns about the sustainability of their crypto accumulation strategies. The mNAV metric has emerged as the key indicator watched by institutional investors tracking the intersection of corporate finance and digital assets.

While the current downturn presents challenges for the entire DAT sector, it also creates opportunities for differentiation. Ethereum-focused treasuries are emerging as the most sustainable model, primarily due to the yield-generating capabilities of staking. According to Bitmine strategist Tom Lee’s estimates, staking alone could add approximately 0.6 points to the mNAV of Ethereum-based DATs, providing a significant structural advantage.

This yield mechanism directly enhances balance sheet strength and creates a virtuous cycle where staking returns enable further accumulation of Ethereum. The dynamic positions Ethereum vehicles more favorably than those tied primarily to Bitcoin or Solana, which lack similar yield-generating mechanics. This fundamental difference in economic model could reshape how corporations approach digital asset treasury management in the future.

Factors beyond staking, including access to low-cost funding and scale advantages, will further separate stronger players from weaker ones. DATs that can leverage DeFi protocols for additional yield generation while maintaining robust risk management frameworks are likely to outperform their peers during market downturns.

The health of digital asset treasuries carries significant implications for broader cryptocurrency markets. DATs collectively hold substantial portions of major cryptocurrencies: approximately 4% of Bitcoin’s circulating supply, 3.1% of Ethereum, and 0.8% of Solana. This concentration makes their financial stability a crucial driver of crypto demand and price support mechanisms.

Kendrick’s analysis suggests divergent paths for different cryptocurrency holdings. Consolidation is more likely among Bitcoin treasuries, potentially leading to coin rotation rather than net new buying. This could create selling pressure on Bitcoin during periods of DAT stress. Conversely, Ethereum DATs are positioned to continue accumulating, providing a stronger tailwind for ether prices relative to its rivals.

The differentiation between Bitcoin and Ethereum treasury strategies reflects broader market evolution. While Bitcoin remains the flagship store-of-value asset, Ethereum’s programmability and yield-generating capabilities are creating new corporate treasury models. This development could accelerate institutional adoption of Ethereum and other smart contract platforms that offer similar economic benefits for corporate balance sheet management.