A prolonged rise in Ethereum’s price increases the value of ETH holdings, but at the same time reduces the ability to convert that value into cash. mNAV compression and competition from ETH spot ETFs are reshaping liquidity access for Digital Asset Treasuries (DATs).
How mNAV Works and Why It Limits Issuances
mNAV compares a company’s market capitalization to the value of its cryptocurrency holdings, and compression of this metric limits capital issuances. When ETH prices rise but the stock does not reflect the gain, mNAV decreases, forcing companies to issue more shares to raise the same amount of cash, resulting in shareholder dilution and discouraging new investors.
ETH Spot ETFs as Competition for Demand
Spot ETFs provide direct exposure, regulated custody, and intraday liquidity, which erodes the competitive advantage of corporate ETH treasuries. By simplifying investment for institutional and retail investors who avoid self-custody, these ETFs force companies to justify a premium through additional services or superior yield.
Public Indicators and Recent Evidence
Public data show that some issuers have mNAV below 1, while others maintain higher ratios, illustrating that a large ETH treasury does not guarantee easy cash access.
-
BitMine (0.99) and SharpLink Gaming (0.89) have mNAV below 1.
-
BitDigital (1.51) and GameSquare (1.13) maintain higher ratios.
This demonstrates that the market does not value all ETH-exposed shares proportionally.
Practical Strategies to Preserve Liquidity
Yield generation and product differentiation are key to maintaining liquidity access without selling large amounts of ETH.
-
Staking and liquid staking can create recurring cash flows.
-
Offering validator operations, professional custody services, or active DeFi strategies helps justify a premium over passive vehicles.
Active Balance Management and Communication
Active balance management, combining partial sales, derivatives usage, and collateralization, along with transparent reporting on staking and liquidity policies, can restore investor confidence. Clear communication regarding rewards, risks, and liquidity practices is essential to reduce mNAV pressure and compete against spot ETFs.
Even with optimistic ETH price projections, these scenarios do not eliminate the structural challenges of mNAV nor the competitive pressure from ETFs.
Conclusion
A prolonged Ethereum rally increases the accounting value of treasuries, but can complicate liquidity access due to mNAV compression and the shift of demand toward spot ETFs. Companies should:
-
Diversify revenue streams.
-
Prioritize yield generation over mass asset sales.
-
Maintain transparency to preserve capital access without sacrificing decentralization principles.
