Even though There are many more company boards The Bitcoin Treasury Bandwagon, their collective appetite for scooping up BTC has waned.
That decline is nothing short of drastic when you look at the numbers. The seven-day moving average of net daily inflows into the Bitcoin Digital Asset Treasury (DATS) recently fell to 140 BTC, marking the lowest level since mid-June and a sharp decline from a July peak of 8,249 BTC, according to bitcointreasures.net.
Things look bloodier when you zoom in on the daily activity this month: 12 out of 15 days saw under 500 BTC flows, along with many days with no flow at all.
We are told that institutional appetite for exposure to BTC through traditional market vehicles has waned after a period of aggressive buying earlier this year that helped BTC prices.
Notably, Bitcoin’s price rally has cooled significantly, falling to around $110,000 after hitting a record high above $126,000 on October 6. Zooming out, the market has been consolidating within a wide range above $110,000 since June, reflecting a tug-of-war between bullish optimism and profit.
The dat trend, pioneered by the likes of the strategy, follows a century-old playbook of borrowing fiat to acquire hard, hard assets.
Bitcoin, with a fixed supply capped at 21 million coins and the best performance among major assets over the past decade, has drawn demand from a growing number of digital assets seeking to hedge inflation and diversify reserves. So far, the top 100 public dats by market value have combined more than 1 million BTC.
Unsteady pace?
However, like gold, BTC does not offer a natural yield, which means that coins acquired with borrowed money are silent on the balance sheet without offsetting cash flow. Therefore, dat trend, is a bet that prices will continue to rise, generating capital gains. This is similar to running a gold mining company, which is also a zero-yield asset.
The most popular approach is to issue stock at a premium to net asset value (NAV), followed by debt issuance to finance purchases. The premium is the result of the narrative, “a memetic premium based on the figurehead in the company — you know them by name,” Nydig said.
Therefore, these firms are exposed to a situation where they fail to generate enough memetic premium to increase their crypto per share or investors liquidate their share holdings, causing the premium to fall.
That’s happening. About one in four publicly traded DATs now trade below their net asset value (NAV), which means their market valuations are lower than the value of the cryptocurrencies they hold on their balance sheets.
According to NYDIG, these premiums are positively correlated with prices, which means a downtrend in the price of BTC could see these premiums evaporate.
