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Falling mNAV Ratios Could Weaken Demand for Ethereum (ETH) and Solana (SOL)
mNAV Crisis Looms – The market-to-net-asset value (mNAV) of companies heavily invested in digital assets is falling sharply, stirring fresh concerns across the crypto market. On Monday, Standard Chartered Bank issued a warning that small to mid-sized digital asset treasury (DAT) firms are particularly vulnerable as their mNAV ratios decline.
What Are DAT Firms?
DAT firms are publicly traded companies that hold Bitcoin, Ethereum, and other cryptocurrencies as core assets on their balance sheets. Unlike traditional corporations that rely on cash or bonds, these firms offer investors indirect exposure to crypto through their stock.
One prominent example is Strategy ($MSTR), which successfully combined cash flow generation with large-scale digital asset holdings. However, many newer DAT firms operate primarily as asset holders without significant income streams, leaving them more exposed to market volatility.
Why the mNAV Ratio Matters
The mNAV represents the ratio of a company’s total market value to its crypto holdings. When this ratio dips below 1-to-1, it signals trouble. Firms in this position struggle to use their assets as collateral for new purchases and may even face forced liquidations if digital asset prices continue to drop.
According to Standard Chartered analyst Geoff Kendrick, several major DAT companies have already crossed this critical threshold. This could lead to short-term weakening demand for cryptocurrencies such as Ethereum (ETH) and Solana (SOL).
Market Outlook
Kendrick predicts a shake-up in the DAT sector as under-capitalized firms come under pressure. In the long term, weaker players are likely to be forced out, leaving stronger companies like Strategy and Bitmine to dominate the space.
Interestingly, Kendrick noted that ETH-focused DAT firms hold a relative advantage over their SOL-focused counterparts, thanks to their larger asset bases.
