Crypto treasury companies are taking a step back after the recent market downturn earlier this month. These firms, which hold large amounts of Bitcoin and Ethereum on their balance sheets have nearly stopped buying since prices tumbled on October 10.
The slowdown shows an ongoing sense of caution across the sector. Coinbase’s Head of Institutional Research, David Duong, noted that Bitcoin buying activity among treasury companies dropped to the lowest level this year and has yet to rebound.
Bitcoin Buying Halts as Confidence Weakens
The pause in Bitcoin purchases by crypto treasury companies is a clear sign that large firms are uncertain about market direction. These organisations typically act as strong buyers when prices dip and help to stabilise volatility.
Their silence now indicates that they have limited faith in any near-term recovery.
Duong described these companies as “heavy hitters with deep pockets.” He explained that their lack of activity shows caution, even at current support levels.
NAVs across crypto treasury companies have been dropping | source: X
The recent crash exposed leverage issues and falling valuations across many digital asset treasuries. Because of this, many of these companies have chosen to guard their cash reserves.
There is one exception, though, and this is BitMine Immersion Technologies.
The Ethereum-focused company has continued its aggressive buying spree. Since October 10, BitMine has reportedly spent over $1.9 billion to acquire nearly 483,000 ETH.
Ethereum followed Bitcoin’s drop earlier in October, falling more than 15% to around $3,686 before climbing back to $4,130. Without BitMine’s steady buying, Ethereum demand among treasury companies would have turned negative.
Market Fragility Amid Fading Institutional Support
Duong warned that if BitMine slows its activity, overall corporate buying could collapse.
He noted that the market looks fragile when the biggest discretionary balance sheets are inactive. The absence of these buyers means that there is less stability and higher risks during sharp price swings.
Large companies like MicroStrategy and Metaplanet once boosted market sentiment through regular Bitcoin purchases.
Now, with many of them pausing or even selling, investors fear further downside pressure.
Crypto Treasury Companies Face Valuation Pressure
Beyond market prices, several crypto treasury companies are dealing with another challenge, in the form of shrinking valuations. Some are now trading below their net asset value (NAV).
This means that their market caps have fallen under the worth of their crypto holdings.
Japanese firm Metaplanet is a major example of this happening. Despite reporting more than 115% growth in Bitcoin-related revenue in the third quarter, its modified net asset value recently slipped to 0.99 before recovering slightly.
The company’s shares have plunged around 70% since June and have erased the premium once tied to its Bitcoin-focused strategy.
When a company’s NAV falls below one, it suggests investors no longer value the business above its underlying assets. This drop shows reduced confidence in the idea that holding crypto on corporate balance sheets automatically adds value.
Fidelity Digital Assets reports that non-mining public companies now hold more than 700,000 BTC and 3 million ETH combined.
ETHZilla’s Sale Shows Shifting Priorities
ETHZilla, another major Ethereum treasury firm recently sold $40 million in ETH to fund stock buybacks after its shares traded at a 30% NAV discount.
The move might help reduce discount pressure, but it also shows how some firms are forced to choose between supporting their stock or maintaining their crypto reserves.
Charles Edwards of Capriole Investments outlined three possible paths for crypto treasury companies now trading below NAV, and none of them are easy.
The first is that they can choose to sell their holdings. This approach raises cash but can hurt both the business and the general market by pushing prices lower.The second is that they can seek acquisition by merging with larger firms or funds. However, this would lead to more market consolidation.Finally, they can choose to increase leverage, because borrowing against crypto assets to boost returns can attract investors. However, this approach exposes companies to heavy risk if markets drop again.
Edwards warned that growing leverage could set the stage for another crisis if asset prices weaken.
Source: https://coinpaper.com/11943/bitcoin-and-ethereum-treasuries-haven-t-been-buying-as-usual-since-the-crash
