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For the first time since its listing, Japanese Bitcoin investment company Metaplanet Inc has experienced a decline in its enterprise value compared to its Bitcoin holdings.
Bloomberg data shows that the market-to-Bitcoin net asset value (mNAV) ratio of the firm dropped below 1 on Tuesday. This implies that Metaplanet is currently trading at a discount to the amount of Bitcoin it has in its balance sheet.
The company holds 30,823 Bitcoin, worth approximately $3.4 billion. Despite this, Metaplanet’s stock price fell by 12.36% on Tuesday, closing at a low of 482 yen (nearly $3.21). This is a 74.5% drop from its all-time high of 1,895 yen in mid-June. The severe collapse comes after its most recent Bitcoin buying program was suspended and a slowdown in its corporate Bitcoin accumulation compared to others in the industry.
The mNAV (market-to-net-asset-value) ratio for Metaplanet is a financial metric that compares the company's enterprise value to the net value of its Bitcoin reserves. A ratio below 1 indicates that the company is undervalued in the market relative to its cryptocurrency holdings.
Analysts highlight that this may warn investors about potential issues, such as corporate debt, rising interest rates, or declining interest in Bitcoin reserve plans.
The decline in the valuation of Metaplanet represents a broader trend among publicly traded Bitcoin treasury firms. According to studies conducted by K33, 26 of the 168 asset-trading firms that hold Bitcoin are currently trading below their asset value.
The mean mNAV across treasury firms decreased to 2.8 in October, after reaching 3.76 in April. This move comes after the rate of Bitcoin accumulation has suddenly slowed by almost half, as companies have made fewer purchases since July.
Analysts attribute this trend to market volatility and stricter monetary policies. The increase in borrowing costs has also heightened the challenge for companies to finance new Bitcoin purchases without compromising profitability.
The position of the most prominent public Bitcoin owner is still held by Strategy Inc., which was previously known as MicroStrategy. The bitcoin treasury company holds 640,250 BTC with an mNAV multiple of 1.48x.
Furthermore, some companies have been defensive in an attempt to stabilize their valuation. Formerly known as 180 Life Sciences, ETHZilla secured an $80 million debt financing to fund a $250 million share buyback. On the same note, the electric vehicle company, Empery Digital, increased its debt range to $85 million despite having more Bitcoin stock than its market value.
Experts in the industry have warned that corporate Bitcoin treasuries are tightening their belts. In June, VanEck analysts cautioned that firms that trade at parity with their Bitcoin holdings would be dissipating the value of the shareholders. The company recommended halting the share issuance programs in case of long-term periods when mNAV is less than 0.95.
Companies such as Sentora and Coinbase have not been left behind in raising these issues. They claim that the majority of Bitcoin treasury businesses are conducted under a negative-carry environment, where they borrow fiat to hold non-yielding crypto assets. This is due to yield-generating mechanisms or risk mitigation strategies that make these approaches challenging to sustain during periods of high interest rates and market pressure.
The existing discount position by Metaplanet places it among large companies reconsidering their treasury policies. Although some investors perceive it as a buying opportunity, analysts believe that the fall in mNAV is indicative of a broader market adjustment. The company's move will either make or break its ability to reclaim its valuation premium or trade below its Bitcoin reserves.
Also Read: Bitcoin & Ethereum After Crypto Crash: What to Expect Next
